Fitch Rates Las Vegas, Nevada's $4.245MM GO Local Improv Bonds 'AA'.

Business Editors

SAN FRANCISCO--(BUSINESS WIRE)--Dec. 3, 2002

Fitch Ratings assigns an 'AA' rating to approximately $4,245,000 City of Las Vegas, Nevada, general obligation (limited tax) special improvement district Nos. 1463, 1470, 1471, 1473, and 1477, local improvement bonds, series 2002. Fitch also affirms the 'AA' rating on all outstanding general obligation bonds, which total roughly $321,095,000.

The 'AA' rating reflects sustained growth in Las Vegas's large and diversifying economic base, decreasing but still significant reliance on tourism and gaming, sound financial performance, moderate debt burden and prudent debt and financial policies. Las Vegas (the city) maintains healthy fund balance levels that help offset concerns over a somewhat elastic revenue base while preserving substantial flexibility within the city's operating property tax levy. The city's debt burden is moderate and will likely remain so given rapid amortization of outstanding debt. In addition, a substantial portion of outstanding general obligation debt is at least partially supported from non-property tax revenue.

Bond proceeds will be used primarily for street paving, curbs and gutters, sidewalks, streetlights, residential, commercial and alley driveway approaches, security wall, sanitary sewer laterals, sanitary sewer collection mains, potable water distribution mains, potable water laterals and drainage facilities. The city's special assessment collections are good with a fiscal 2002 ratio of collections to billings at 100.52%. Collection rates have exceeded 100% in four of the past six years with the low years occurring in fiscal 1997 (95.58%) and fiscal 2001 (98.68%).

The cost of the improvements in each special assessment district is assessed against affected parcels. The assessments are a lien against each parcel until paid. Assessments on parcels within district Nos. 1470, 1471 and 1473 are to be repaid in 20 equal semi-annual payments while property owners in district Nos. 1463 and 1477 are to be repaid over 40 equal semi-annual payments. These payments are deposited in a special bond fund and pledged solely to payment on the bonds. The bonds, however, are ultimately secured by an ad valorem property tax pledge on all taxable property in the city.

Las Vegas represents a substantial portion of Nevada's tax and employment base, which has benefited from the region's expanding population and economic growth. Recent development both directly within the city and throughout Clark County continues to support greater employment diversity. This helps offset concerns over dependency on tourism and gaming and fluctuations inherent within those industries and the city's revenue base. Nonetheless, the region remains dominated by gaming, although its dominance has decreased. The negative impact following the events of Sept. 11, 2001 and a downturn in the national economy appears relatively moderate.

Assessed valuation gains have been substantial, as a result of new building, as well as rising property values. Assessed valuation rose a strong 10.5% per year on average from fiscal years 1997-2003. Building permit activity remains strong although somewhat below recent years' levels. City wealth indicators are slightly above average, trending higher than both state and national averages. Las Vegas and Clark County unemployment levels have historically remained slightly above national levels although the spread between the national and local averages increased in 2001.

Financial operations have shown healthy surpluses in recent years, and although preliminary results for fiscal 2002 indicate a slight operating deficit, an offsetting equity transfer is estimated to minimize the impact on the fund balance. The total general fund balance, which ended fiscal 2001 at a healthy 19.4% of expenditures and transfers, is expected to remain a solid 17.6% of total fiscal 2002 spending. The city relies on sales and use taxes, property taxes and revenue from licenses, permits, and fees, and other intergovernmental revenue for the bulk of its general fund revenues.

Direct debt levels are kept low as a majority of the city's general obligation debt is repaid from non-property tax revenues such as special taxes and enterprise revenues. Including overlapping debt, total debt ratios are moderate at $1,686 per capita and 2.98% of market value. Amortization is rapid with nearly 69% of debt retired in 10 years. No major debt financings are planned in the near-term.