Fitch Rates Indianapolis Public Library, Indiana's $12MM GOs 'AAA'.

CHICAGO -- Fitch Ratings has assigned an 'AAA' rating to the Indianapolis-Marion County Public Library, Indiana's $12 million general obligation bonds, series 2005, scheduled for competitive sale on Nov. 15 with H.J. Umbaugh and Associates serving as the library's financial adviser. The Rating Outlook is Stable. Proceeds will finance a portion of the district's central library expansion project. The bonds are unlimited tax general obligations, payable from ad valorem taxes levied on all taxable property within the district. Fitch also affirms the 'AAA' rating on the district's $80.6 million of outstanding general obligation debt.

The 'AAA' rating reflects the district's strong and diverse economic base, consistent financial performance, and extremely low direct debt levels. The Indianapolis-Marion County Public Library District has minimal operating risks, with past changes in financial position related to the internal funding of capital expenses. Financial reserves are good in the context of these risks and are enhanced by the financial support of a separately managed private foundation that complements the district's community service. Continued economic growth and gains in operating efficiencies should promote further improvement in the district's financial position. Although construction of the central library experienced delays in 2004, which will increase final costs, construction resumed in July 2005 and may require a manageable level of additional general obligation bond issuance.

The Indianapolis-Marion County Public Library serves all of Marion County, except for the City of Beech Grove and the Town of Speedway, which have their own libraries. The library's circulation has grown 4.2% annually over the past decade, ranking the library as the 11th largest urban library nationwide. The Hennen American Library Rating Index, which measures levels of circulation, materials, staffing, reference usage, service, and expenditures per capita, recently rated the district sixth nationally among libraries serving a population of more than 500,000. Library board appointments reflect the district's close ties with area governments.

Marion County ranks as the state's largest county in terms of both population and economic output. As of August 2005, the county's unemployment rate equaled 5.5%, compared with a 5.2% rate for the state and a 4.9% rate for the nation. Recent building activity indicates continued economic strength, as countywide building permit values have averaged more than $1.9 billion annually since 1996 and underpinned a 4.8% annual growth rate in the district's tax base.

The district's financial position reflects its limited operating risks. General fund revenues have increased 3.5% annually since 1995, with most of the growth attributable to gains in property tax receipts. Increased operational efficiencies and reduced operating support of capital projects held expenditure growth to 2.3% annually over the same period. Although the general fund experienced a shortfall in 2003, which reduced the ending balance to $3.8 million (10.6% of spending), additional resources in 2004 elevated the balance to $5.9 million (19.4%).

The continuation of a hiring freeze since 2003 and other cost-cutting efforts, combined with steady economic growth in the district, should lead to a small operating surplus in 2005. The library's financial position is expected to remain strong and management is committed to further operating efficiencies without a service impact.

The district's debt levels represent a comparatively low $111 per capita and 0.2% of market value, reflecting the district's historical use of operating funds to finance capital projects. The central library project has received support from the Lily Endowment ($25 million) and the Library Foundation ($20 million), which together represent 44% of the original project cost. Overall debt equals $3,030 per capita and 6.6% of market value.

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