Fitch Revises Outlook on Howell Township, Michigan's LTGOs to Positive; Rates 2007 LTGOs 'A'.

CHICAGO -- Fitch assigns an 'A' rating to the Township of Howell, Michigan's (the township) $8,425,000 special assessment limited tax (LTGO) bonds, series 2007. Additionally, Fitch affirms the rating on the township's approximately $21 million of outstanding LTGO debt. The Rating Outlook on all LTGO debt is revised to Positive, from Stable.

The bonds are scheduled to sell competitively on Jan. 22, 2007 with Bendzinski & Co. serving as financial advisor. Proceeds will finance water supply and sanitary sewer improvements. The bonds are secured by ad valorem taxes levied on all taxable property in the township, subject to constitutional and statutory tax rate limitations. However, the township intends to repay this issue with special assessments derived from its utility systems.

The rating is based on the township's above-average wealth levels, proximity to regional employment centers, and sound financial performance. The Positive Outlook is based on the township's accelerated tax base expansion, ample financial flexibility, and good prospects for development as the township constructs infrastructure to accommodate population gains. Commercial and residential development is guided by a community master plan and utility infrastructure plan. The township's strong local economy and affluent, growing residential tax base produces good revenue growth and a healthy financial position despite declines in state revenue sharing.

Howell Township, located along Interstate 96 in central Livingston County, Michigan, is a growing community benefiting from excellent transportation access to Lansing, Detroit, and Ann Arbor. Livingston County, which ranks as Michigan's third wealthiest county, is one of the state's most rapidly growing in terms of population, which increased an average 3.4% annually since 1990, while the township itself has grown at about the same rate to reach an estimated 6,672 in 2006. Historically a rural community, the township's proximity to regional employment centers and affordable housing attracts residential and commercial development, fostering tax base growth averaging 9.7% annually since 1998. Per capita money income within the township equaled $23,840, representing 108% and 110% of the state and national averages, respectively, as of the 2000 census.

Howell Township's expanding tax base and strong fiscal management result in a healthy financial position. The township achieved a total general fund balance equal to $807,842 or 77.5% of expenditures in fiscal 2006 (June 30 year-end), an increase from fiscal 2001's $520,858 (58.6%). Steady gains in property tax receipts, which averaged a rapid 12% annually during this period, partially compensated for declines in state-shared revenues. Reflecting this shift, state-shared revenues declined as a percentage of total general fund revenues to 36% in 2006 from 50% in 2001.

Financial performance should remain solid, as Fitch expects fiscal 2007 to be balanced. The township is committed to maintaining a fund balance over $500,000, ensuring future financial flexibility. Additionally, the township's dedicated property tax millages for fire services and roadway improvements results in tax receipt growth on pace with increased service demands.

Howell Township's outstanding debt relates to its portion of county-issued bonds for water and drain improvements, essentially repaid by 2010, and a small amount of its own general obligation debt primarily used for water and sewer system expansion. As a result, its moderate direct debt equals $3,890 per capita or 2.9% of full market value. Incorporating the debt of school districts and the county, the overall tax burden equals a moderately high $8,090 per capita or 6.0% of market value. Though no other large capital projects are planned, the township may issue special assessment debt backed by its general obligation pledge in the next year. However, special assessment debt issuance will only occur based on accelerated development within the township and growing property values will ease the relative debt burden.

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