Fitch Rates Monmouth Cnty Improvement Auth, NJ 2008 Gtd Governmental Loan Revs 'AAA'.

NEW YORK -- Fitch Ratings has assigned an 'AAA' rating to Monmouth County Improvement Authority (MCIA), NJ's approximately $41 million county guaranteed governmental loan revenue bonds, series 2008 (the bonds). The bonds are scheduled to sell via negotiated sale on Nov. 12, 2008.

The bonds are secured by a general obligation (GO) guarantee of Monmouth County, NJ (the county) whose GO bonds are rated 'AAA' by Fitch. Bond proceeds will be used to permanently fund outstanding bond anticipation notes and unfunded municipal capital bond ordinances of 10 participating municipalities in the county.

Fitch has also affirmed the 'AAA' rating on approximately $340 million of outstanding county GO bonds and $77.8 million of outstanding county-guaranteed MCIA bonds. The Rating Outlook is Stable.

The 'AAA' rating reflects the full faith and credit guarantee to pay debt service of Monmouth County. The county's solid financial management has resulted in continued strong operations and financial flexibility, stable growth in its wealthy tax base, and low direct debt levels with rapid amortization. The county continues to benefit from positive employment growth, and current unemployment levels remain below both the state and national averages. Fund balances continued to grow in 2007 due to the county's conservative budget practices, expenditure controls, and healthy flow of revenue driven by an expanding property tax base. The county's capital plan has grown, but remains affordable, and although primarily bond-funded, debt levels should remain moderate given the county's conservative debt policies including rapid amortization rates.

The county is located along the northern Atlantic Ocean shore of New Jersey, 50 miles outside of New York City. The 2000 census revealed an 11.3% population increase over that of 1990, and the 2007 estimate of 635,285 rose just under 1% since 2000 and is on par with state growth trends. Wealth levels remain strong as demonstrated in the county's high market value per capita of $200,554 in 2008. While the health care and retail sectors still dominate private employment, strong gains in the real estate, wholesale, and leisure and hospitality sectors are evident. The county's unemployment rate of 4.6% in June 2008 remains below the state and national averages, at 5.3% and 5.3%, respectively, but did increase from the June 2007 level of 3.7%.

With the planned closure of Fort Monmouth, the composition of the county's largest employers will move away from the governmental sector. It will concentrate in the education and health care sectors as well as the professional and business and retail sectors. In response to the base closure, the Fort Monmouth Economic Revitalization Commission, with local, state, and county representation, is exploring redevelopment options. Fitch believes the county's ability to withstand the base closure is strong as the economy is deeply diversified, providing opportunities for the highly skilled displaced employees. In addition, demand for land in the area of Fort Monmouth is high. The current remaining 4,800 primarily civilian employees at the base represent a relatively small portion of the county's overall labor force, which totaled 330,899 in December 2007.

The county's financial position is strong, with 2007 unreserved fund balance at $87.3 million, or 17.8% of expenditures. While the county realized a small surplus of $1.4 million and the unreserved fund balance remains strong, it dropped as a percentage of spending from 18.2% in 2006. Despite consistent budgeting of reserves, surplus operations occur consistently supported by conservative budgeting and effective expenditure controls. The county's wealthy property tax base has expanded steadily and remains primarily residential at 82%. With the revaluation of existing property and new construction, property values grew at double-digit rates through 2007. In 2008, estimates show a slowing to an annual growth rate of 6.7%.

The county's direct debt burden is low at $549 per capita and 0.27% of market value (MV). Debt levels are more moderate on an overall basis, with debt per capita at $3,111 and 1.55% of MV. If MCIA debt is treated as non-self-supporting, the direct debt burden rises to a still low $726 per capita and 0.37% of MV and the overall net debt rises to a still moderate $3,288 per capita and 1.64% of MV. Pursuant to county resolution, county debt is amortized very rapidly, providing ample capacity in future years for continued capital investment. Amortization rates are comfortably above the 70% policy, with more than 91% retired in 10 years.

Fitch issued an exposure draft on July 31, 2008 proposing a recalibration of tax-supported and water/sewer revenue bond ratings which, if adopted, may result in an upward revision of this rating (see Fitch research 'Exposure Draft: Reassessment of the Municipal Ratings Framework'.) At this time, Fitch is deferring its final determination on municipal recalibration. Fitch will continue to monitor market and credit conditions, and plans to revisit the recalibration in the first quarter of 2009.

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