Fitch Rates Palm Beach County, Florida GOs (Waterfront Access Projects) 'AAA'.

TAMPA, Fla. -- Fitch Ratings assigns an 'AAA' rating to Palm Beach County, Florida's approximately $50 million general obligation (GO) bonds, (Waterfront Access Projects) series 2006, scheduled for negotiated sale with a syndicate led by Janney Montgomery Scott on March 13. Fitch also affirms the 'AAA' rating on $298 million of outstanding GO bonds. Bond proceeds will be used to finance projects associated with waterfront improvements, such as boat ramps, public parking, waterway dredging, and the acquisition of real property or interests that preserve working waterfront areas. County voters approved by referendum the issuance of up to $50 million of GO bonds for these purposes in November 2004. The Rating Outlook is Stable.

The 'AAA' rating on Palm Beach County's GO bonds reflects the county's vibrant and diversifying economic base, sound financial position, and moderate debt levels. Palm Beach County is one of the nation's wealthiest, with per capita personal income levels nearly 50% higher than state and national averages. The economic base is diversified, balancing luxury tourism and technology manufacturing in the coastal areas with agriculture in the western portion of the county. The county's unemployment rate fell to 3.1% in December 2005 from 4.6% one year prior. Debt levels are moderate and are expected to remain manageable given well-established debt affordability guidelines and steady tax base and population growth.

Palm Beach County's low tax rates, made possible by its prosperous tax base, provide ample revenue-raising flexibility. General fund balances that consistently exceeded 30% of expenditures and transfers out were reduced in fiscal 2004 due to one-time capital investments and reimbursable hurricane expenses, but remained sizable at 22% of spending. The special revenue funds, many of which support general government functions, also are healthy. Unaudited results for fiscal 2005 show favorable variances from budget and modest growth in undesignated reserves. The higher ending position in fiscal 2005, along with a 17% increase in taxable assessed valuation, underpins the county's forecast of another solid year in fiscal 2006. The property tax rate, already quite low, was further reduced to 4.45 mills from 4.5 in the budget year.

Future borrowing plans for the 2006 calendar year include $15 million for a parking facility and $16 million for costs related to the Scripps Biomedical Research Park Project, both secured by the county's covenant to budget and appropriate (CB&A) legally available non-ad-valorem revenue. The county plans to sell its taxable GO refunding bonds (land acquisition program), originally planned for November 2005, in the next several months. Additional county debt expected for the current fiscal year includes financings supported by water and sewer and airport enterprise fund revenues for about $150 million and $70 million, respectively.

County commissioners recently approved a new location for the Scripps research facility, originally planned for the rural Mecca Farms site located in the northwestern portion of the County. On Feb. 14, the county voted to develop the research facility on the campus of Florida Atlantic University in the northern portion of the county. The plan requires approval from the governor's office, which is expected to reach a decision in early April. The county previously sold two series of bonds (2004A and 2005A), totaling $193 million and secured by a CB&A from non-ad-valorem revenues, for the Mecca Farms site acquisition and construction of the Scripps facility, respectively. The series 2004A bonds have an extraordinary call feature that allows them to be redeemed from proceeds of land sales, which would occur if the state approves the new site and the Mecca Farms land is sold. The series 2005A bond proceeds are being held in escrow and the county plans to expend 2005A bond proceeds for facility construction at the new site. Although the timing and ultimate cost of construction is unclear, the County expects to be relieved of financing $180 million of infrastructure improvements that were needed at the Mecca site and incur an additional expense to Scripps for legal delays and increased construction costs, not expected to exceed $50 million. Fitch will continue to monitor the impact of the Scripps Research facility development on the credit quality of the county.

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