Fitch Rates Las Vegas, Nevada's $68.6MM GO Ltd Tax Bonds 'AA'.

SAN FRANCISCO -- Fitch assigns the following rating to bonds issued by the City of Las Vegas, Nevada (the city):

-- $18,000,000 Taxable various purpose bonds (additionally secured by pledged revenues) Series 2006A 'AA';

-- $50,550,000 Tax-exempt various purpose bonds (additionally secured by pledged revenues) Series 2006B 'AA'.

Fitch also affirms the 'AA' rating on $301.2 million in outstanding general obligation (GO) bonds. The Rating Outlook on all bonds is Stable.

Bond proceeds will fund various park projects in the city, as well as advance refund $22.0 million in outstanding GO parking bonds, series 2002A. The bonds will be sold competitively on May 9 with Nevada State Bank Public Finance acting as the city's financial advisor.

The 'AA' rating reflects sustained growth in Las Vegas' large and diversifying economic base as well as the city's sound reserves and prudent debt and financial policies. These factors are balanced somewhat by a decreasing but still significant reliance on tourism and gaming, along with fiscal pressures resulting from recent growth and the newly enacted property tax abatements. Las Vegas maintains healthy fund balances, which help offset concerns over a volatile revenue base.

The Las Vegas area represents a substantial portion of Nevada's tax and employment base, which has benefited from the region's economic growth and expanding population. Recent development, both within the city and throughout Clark County, continues to generate greater employment diversity, helping to offset concerns over dependency on tourism and gaming, fluctuations inherent within these industries, and their effects on city revenues. Nonetheless, the region remains concentrated in tourism.

Assessed valuation gains have been substantial due to new building as well as rising property values. Assessed values rose a very strong 29.7% and 29.9% in fiscal year (FY) 2007 and 2006, respectively--averaging 15.7% per year since FY 2001. Building permit activity remains healthy and fairly stable. In response to rapidly rising property tax bills, the state legislature passed a law that limits tax bill growth to moderate amounts subject to a complex formula. While it is too soon to quantify the impact of such legislation on future property tax revenue, city management expects new construction and development to moderate the impact. Fitch views the legislation as a longer-term concern that is largely mitigated by the city's historic and projected growth, the formula's inclusion of balancing factors, and the city's only moderate reliance on property taxes. City wealth indicators are slightly above average, trending higher than both state and national averages. Las Vegas and Clark County unemployment levels now are below state and national levels, a reversal from recent years.

Financial operations are marked by healthy reserve levels and good fiscal management policies. The total general fund balance, most of which is unreserved, ended FY 2005 at a solid 16.6% of spending. Revenue growth outpaced expenditure growth for the second year in a row, helping replenish the general fund balance following earlier drawdowns that funded one-time recreation projects. Most of the revenue growth is attributed to increasing consolidated tax revenues-a local revenue source that accounts for 53% of total revenues. Fitch expects the unreserved general fund balance to remain at or above its current level, which exceeds the 12.0% council-mandated minimum.

The city's debt burden is low to moderate and will likely remain so as rapid amortization offsets likely additional debt. In addition, a substantial portion of GO debt outstanding is supported from non-tax revenue. Including overlapping debt, total overall debt ratios are moderate, at $2,166 per capita and 2.0% of market value.

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