Fitch Rates Summit County Port Authority, Ohio's Bond Fund Revs 'BBB+'.CHICAGO -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. assigns a 'BBB+' rating to the Summit County Port Authority, Ohio's (bond fund program) $6,000,000 taxable development revenue bonds, series 2006E (Cavaliers Practice Facility Project). The series 2006E will be offered by Robert W. Baird Robert Wilson Baird (born April 1, 1883) helped found the financial services firm that bears his name and led it for more than 40 years. Baird’s father was a professor of Greek literature at Northwestern University in Evanston, Illinois, where Baird grew up. & Co. Inc. during the week of Nov. 13, 2006. Fitch also affirms the 'BBB+' rating on the authority's $32.9 million outstanding bond fund development revenue bonds. The Rating Outlook is Stable. The 'BBB+' rating reflects the sound structure of the bond fund, program reserve requirements Reserve Requirements Requirements regarding the amount of funds that banks must hold in reserve against deposits made by their customers. This money must be in the bank's vaults or at the closest Federal Reserve Bank. that provide liquidity and first-loss protection to meet bond payments in the event of a loan default and formal loan underwriting criteria. The bond fund, which was established under a basic trust indenture dated July 1, 2004 between Summit County Port Authority (the authority) and U.S. Bank National Association (the trustee), exists to promote economic development primarily in Summit County, Ohio Summit County is a urban county located in the state of Ohio, United States. As of the 2000 census, the population was 542,899. Its county seat is Akron6. It is named because the highest elevation on the Ohio and Erie Canal was located here. by loaning revenue bond proceeds to small- and medium-sized commercial and industrial enterprises as well as non-profits and governmental entities. By entering into cooperative agreements with governmental entities, the authority can also make loans for the bond fund in various counties throughout the state. Bondholders of the current series and future bond series issued under the basic trust indenture will have a pro rata [Latin, Proportionately.] A phrase that describes a division made according to a certain rate, percentage, or share. In a Bankruptcy case, when the debtor is insolvent, creditors generally agree to accept a pro rata share of what is owed to them. claim against all funds created under the indenture including, among other funds, the revenue fund, into which borrowers will make monthly loan repayments, the primary and program reserve funds, and the collateral fund. The bond documents require the establishment of a primary reserve fund for each series of bonds equal to 10% of the original par amount of the bonds. The series 2006E reserve requirement will be met with a qualified letter of credit (LOC LOC - lines of code ). In addition to the $3.9 million in primary reserves provided by the borrowers, including series 2006E dedicated reserves, the bond fund maintains $10 million in program reserves: a $3 million county grant received in February 2001; a $2 million state grant received in April 2001; and a $5 million irrevocable LOC. The LOC will expire on Sept. 15, 2009 and is required to be drawn upon if not extended or replaced with an acceptable LOC. The LOC provides the bond fund with a revolving line of credit Revolving line of credit A bank line of credit on which the customer pays a commitment fee and can take and repay funds at will. Normally a revolving LOC involves a firm commitment from the bank for a period of several years. that supplements the primary and other program reserves. The bank's lien on bond fund collateral is subordinate to bondholders. After this issue, the primary and program reserves will equal 40% of the total outstanding bonds, which provide sufficient cushion to offset potential loan repayment delinquencies or default. Including the 2006E issue, the program will have 12 loans outstanding totaling $38.9 million. The Cavaliers Practice Facility LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control represents the program's largest borrower at $6 million (or 15% of total outstanding loans). As the authority issues additional bonds, it is anticipated that the reserves will be further leveraged but with the objective of maintaining the 'BBB+' rating on the bond fund. The authority has adopted formal underwriting criteria for bond fund borrowers, which consider purpose for the project, current and historical financial strength of the borrower, knowledge and experience of management, and the source and plan of loan repayment. The underwriting criteria also include debt service coverage, leverage, and liquidity and collateral requirements. The 2006E bond proceeds will fund a portion of the costs to construct a 50,000 sq. ft. basketball practice and training facility located in Independence, Ohio for the Cleveland Cavaliers NBA NBA abbr. 1. National Basketball Association 2. National Boxing Association NBA (US) n abbr (= National Basketball Association) → Basketball-Dachverband (= team. The bonds are secured by lease payments from the Cavaliers Practice Facility and a mortgage on the Authority's leasehold interest in the project. Furthermore, the primary and program reserves secure the bonds. 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