Fitch Rates Montgomery County, Maryland Parking Revenue Bonds 'AA-'.

WASHINGTON -- Fitch Ratings assigns an underlying 'AA-' rating to Montgomery County, Maryland's approximately $17.3 million parking system revenue bonds (Bethesda Parking Lot District), series 2005, scheduled for bids on or about July 28. The bonds are expected to carry insurance from a company whose insurer financial strength is rated 'AAA' by Fitch. Fitch also assigns the 'AA-' underlying rating to approximately $31 million of outstanding parity debt. The Rating Outlook is Stable.

The 'AA-' rating reflects this parking district's lengthy history of successful operations, the importance of the district to the county's transit and commercial development programs, the affluence and density of the service area, and strong coverage of maximum annual debt service (MADS) from a combination of net parking revenues and a dedicated property tax. Additional safety margin is available, if needed, from capacity under the district's property tax limit and ample enterprise fund cash reserves equal to three times (x) future MADS. A debt service reserve requirement is met through a surety policy. Legal provisions are satisfactory and include a rate covenant of 1.25x MADS coverage and an additional bonds test of 1.25x coverage from prior year net revenue.

Credit concerns reflect the district's relatively small tax base, encompassing about 1% of the county's $93 billion of assessed property value, limited information regarding the district's competitive position with respect to parking prices and market share, and the strong likelihood of additional leverage on pledged revenues from further development of parking facilities.

The bonds are secured by net revenues of the district, which include parking fees, parking violation fines, and ad valorem tax revenues. Property taxes are levied and collected by the county at a rate up to $0.40 per $100 of assessed valuation on all improved commercial or industrial property. The current rates, which are $0.28 for improved property and $0.14 for unimproved property, have not changed over the past decade and generate approximately $4 million, or 25% of district revenue. The district tax is included on general county tax bills and is subject to the same lien and priority as all other county property taxes. Exemptions from the parking tax, or reductions in the amount due, are permitted by county code if property owners supply a minimum number of parking spaces at their own cost.

Parking fees vary by length and frequency of usage and include rates for hourly, daily, and monthly parking. Fee collections totaled nearly $8 million in fiscal 2004, or 49% of revenue. County officials report that rates are competitive and that the garages are heavily utilized; rates were last increased in fiscal 2002. Parking enforcement generates the remaining 25% of revenue. The county contracts with private operators to collect fees, and cash is swept daily and deposited into county accounts. In total, net revenues for fiscal 2004 cover projected MADS, including debt service for the series 2005 bonds, by 2.1x.

The district was established in 1947 and is centrally administered and operated by Montgomery County, whose general obligations are rated 'AAA' by Fitch. The district includes nine surface lots, eight garages, and 791 curb meters, totaling nearly 6,800 spaces. The parking facilities serve Bethesda's central business district, which borders the District of Columbia and is bisected by heavily traveled Wisconsin Avenue. The area is highly developed and includes several office buildings, high-end retail businesses, and restaurants. There is no significant concentration among the top taxpayers.

Capital improvements over the next five years total $33 million, about one-half of which is financed by this offering. The balance will be funded from ongoing net revenues and from the district's $20 million in unrestricted reserves. Additionally, an existing surface lot may be sold to a developer and the proceeds used, along with additional parity debt, to construct a multistory garage.

Fitch's rating definitions are available on the agency's public web site, www.fitchratings.com. Published ratings, criteria and methodologies and relevant policies and procedures are also available from this site, at all times. This document will remain on the public site for seven days.