Fitch Rates Montgomery County, Maryland's $33.6MM COPs 'AA+'; Outlook Stable.

NEW YORK -- Fitch Ratings assigns an 'AA+' rating to Montgomery County, Maryland's (the county) estimated $33.6 million certificates of participation (COPs) (Equipment Acquisition Program) bonds, series 2007. The bonds are scheduled to price via competitive sale on Oct. 17, 2007. Davenport & Company LLC is the financial advisor. Fitch also affirms the following outstanding ratings:

Montgomery County, Maryland 

--$1.6 billion general obligation (GO) bonds at 'AAA';

--$39.8 million lease obligations (Metrorail Garage Projects) at 'AA'.

Maryland Economic Development Corporation

--$48.3 million lease revenue bonds at 'AA+'.

Montgomery County Revenue Authority

--$22.8 million lease obligations, (Germantown Indoor Swim Center Project) at 'AA+';

--$15.0 million lease obligations, (Conference Center Project) at 'AA'.

Maryland-National Capital Park and Planning Commission (MNCPPC)

--$38.1 million Montgomery County GO bonds.

The Rating Outlook is Stable.

The 'AA+' rating on the COPs results from solid legal provisions and the essentiality of the financed projects. COP payments are subject to annual appropriation. The rating also reflects the general credit characteristics of the county, including its broad and diverse economy, strong fiscal flexibility and reserve levels, and manageable debt with rapid amortization.

Bordering Washington D.C. and northern Virginia, Montgomery County's wealthy suburban economy is fueled by a large U.S. government presence, which provides stability to the region. The biotechnology sector continues to expand, drawing on the county's well-educated labor force. Montgomery County is also developing its four central business districts. The county's unemployment rate has been below state and federal averages since at least 1998, with July 2007's 3.2% significantly below Maryland's 4.2% and the nation's 4.6%. Assessed valuation (AV) growth has averaged a steady 9.7% annually since fiscal 2002, and Maryland's three-year phase-in of annual AV raises should contribute to continued solid tax base growth over the next several fiscal years. Various economic indexes have consistently ranked the county, which had an estimated 2006 population of 932,131, among the wealthiest in the nation.

The county has demonstrated outstanding financial management through solid financial planning and performance and its commitment to reducing growth in outyear budgets. The county ended fiscal 2006 with a strong financial position; the unreserved general fund balance of $281.8 million equaled 11.6% of its expenditures, transfers out, and other uses, and the revenue stabilization fund (RSF) was at the maximum allowable amount, $107.8 million. Income, transfer, and recordation taxes' strong showings were responsible for the $42.2 million boost to the total general fund balance. Projections indicate that fiscal 2007 revenues will marginally exceed budgeted amounts, with strong income tax receipts compensating for the decline in transfer and recordation taxes attributable to the slowing housing market. The county slowed its budget's growth rate by adopting a fiscal 2008 general fund budget that was only 7.7% greater than the adopted fiscal 2007 budget. However, it will need to assess its risk from the state's current deficit as it begins preparation of its fiscal 2009 budget.

Debt levels are moderate, and amortization remains rapid at 69.5% in 10 years. Excluding debt of the Washington Suburban Sanitary Commission (WSSC; rated 'AAA', with a Stable Rating Outlook, by Fitch), which is ultimately secured by property taxes but actually paid from rates and charges on customers served, overall debt equals $2,167 per capita, or 1.6% of full market value. The fiscal years 2007-2012 amended capital improvement plan (CIP) totals $3.2 billion and allocates substantial funding for schools (38%), transportation (22%), and the community college (11%). General Obligation bonds fund about 53% of the total CIP, with current revenue contributing roughly 17%.

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