Fitch Rts Cleveland-Cuyahoga Cnty Port Auth, Ohio $21.7MM RITA Bonds 'BBB+'.

NEW YORK -- Fitch Ratings has assigned a 'BBB+' rating to the Cleveland-Cuyahoga County Port Authority, Ohio's $21,700,000 development revenue bonds, series 2004 (RITA Project). The Rating Outlook is Stable. The bonds are expected to price around Dec. 16 in an underwriting led by NatCity Investments, Inc. Dated Dec. 30, the bonds will pay interest each May 15 and Nov. 15, beginning May 15, 2005, and mature Nov. 15, 2005-2022. The bonds will finance the acquisition of computer equipment, the design and development of software, the installation of a HVAC system and the purchase of other furnishings and equipment used in the collection of municipal income taxes.

The Regional Council of Governments (RCOG), a regional council of governments organized under Ohio law to enable the sharing of facilities for common benefit, will serve as lessee in making rental payments, subject to appropriation, to U.S. Bank, the trustee. Pledged revenues include the rental payments, interest income and other revenues from the lease, sale of disposition of project facilities. While the bonds do not represent general obligations of the member municipalities or the port authority, member municipalities are responsible for their proportionate share of RCOG obligations, including obligations of the RCOG's Regional Income Tax Agency (RITA). Municipal participants in RCOG may withdraw on Dec. 31 in any year, but must provide notice to the Board of Trustees no later than July 1 of the same year. A majority vote of the council's membership may dissolve RCOG, but not before the council pays all outstanding debts and obligations.

The 'BBB+' is based on RITA's steady break-even financial performance since its formation in 1973, its competitive strength in providing satisfactory municipal income tax collection services for local governments and growing income tax collections which generate collection fees to meet operating and debt service obligations. Key financial risks include non-appropriation of rental payments, loss of member governments to other collection agencies or self-collection, obsolescence of collection systems and potential taxation changes. While RITA's competitive pressures have been high for the past three decades, it has maintained a lion's share of the statewide tax collection business and the upgrading of its financial systems will improve customer service and sustain its low-cost performance. If RITA experiences a dramatic loss of business (as demonstrated by audited income tax collections of less than $200 million, compared with estimated 2005 collections of $463 million), the RCOG, with prior written consent of the bond insurer, will deposit sufficient funds with the trustee to make a special mandatory call of outstanding obligations.

Although RITA is responsible for meeting operating and debt service costs through sufficient tax collection charges and may not pledge collected income taxes, it must meet rental payments and other obligations before annual income tax distribution to member governments. With estimated RITA service charge reimbursement of $14 million in fiscal 2005 (Dec. 31 year-end), maximum debt service coverage would be about 7.2 times.