Fitch Rts Florida Facils Pool $112.8MM Rev Bonds 'A+'.

Business Editors

NEW YORK--(BUSINESS WIRE)--April 28, 2003

Fitch Ratings assigns the Florida Department of Management Services' $112,815,000 Florida Facilities Pool revenue refunding bonds, series 2003A an 'A+' rating. The bonds are expected to be offered competitively on 18 hours notice as early as April 29, 2003. The bonds will be due Sept. 1, 2003-2017, with 2013-2017 maturities subject to bidders' option to designate terms with mandatory sinking fund redemption; optionally callable March 1, 2013 at 101%. A debt service reserve equal to maximum annual debt service, will be met through purchase of a surety bond, consistent with previous practice. Depending on market conditions, bond proceeds will refund all or portions of series 1992.

The bonds are payable, on parity with $381.8 million outstanding bonds prior to the refunding and payable from the trust estate. Trust estate revenues consists of revenues derived from the leasing to state agencies of a pool of office buildings under the jurisdiction of the Department of Management Services. While bond payment depends on annual legislative appropriations, the present pool of 61 existing facilities with approximately 6.0 million square feet of office space. Periodically, the facilities in the pool will change, but the rates are set to meet debt service.

The state legislature authorized the program and specifically approves each project and the bonds issued to finance the project. Central controls are strong, with the State Board of Administration approving fiscal sufficiency before issuance; court validation also occurs. The department oversees the leasing of all office space by the state agencies, whose rentals are required to be set to produce 110% debt service and reserve deposits, and 100% of operating and maintenance costs and required deposits to the capital depreciation reserve fund. Additionally, should an agency fail to make payments when due, the controller shall withhold the unpaid amounts from general revenues of the agency and allocate it to the department.

State facilities pool space now represents about 32% of occupied space, and when private leased space is included, equal to 48% of total space occupied by state agencies. Some of the space is represented by debt-free pre-existing facilities including the capitol. Rentals in the facilities pool have become increasingly favorable as the pool has enlarged and now are about 91% of the private rental rates; average pool rates have been below private space since 1995. Occupancy rates have been above 95% since the pools' creation in 1986, however, have declined slightly from 98% occupancy in 1998 to 96% occupancy in 2002.

The State of Florida's general obligation debt is rated 'AA', characterized by sustained rapid growth, economic broadening, and increasing diversification. The state's economic growth over the past decade contributed to better than expected financial operations, achieving balance and building up a sizeable reserve. Revenues began, however, to lag in fiscal 2001 and worsened in fiscal 2002, aggravated by the events of Sept. 11 and their impact on the state's large tourism sector. General revenues were downwardly revised twice, for a total of $1.3 billion or 6.6%. Cuts, available balances and deferral of a planned tax cut were employed and, in addition, the March 2002 revenue estimating conference increased estimated by $429 million and actual collections came in about $148 million to reach $19.3 billion. The general and working capital funds closed with a balance of $984 million at June 30, 2002, and the stabilization fund held $941 million. Revenue estimates for the current year were reduced $222 million, or 1.2%, in November 2002 and an additional $27 million in March 2003. The year-end balance is now projected at $130 million, with $958 million in the stabilization fund; combined, the balances equal 5.5% of estimated revenues. For fiscal 2004, revenues are estimated at $20.1 billion, an increase of 2.6% from this year. They were lowered by $320 million, or 1.6%, in March, due largely to the expected performance of the sales tax in a weaker economy. Net tax-supported debt approximates $16.9 billion, or $1,197 per capita and 3.6% of personal income. It remains in the moderate range, although increasing. Debt affordability guidelines currently cap debt service at 7% of revenues but there has been some discussion of raising this limit.