Fitch Rts Northern Palm Beach Cty Improv Dist, FL -Abacoa Project- 'BBB'.

Business Editors

NEW YORK--(BUSINESS WIRE)--April 30, 2003

Northern Palm Beach County Improvement District, FL's approximately $44 million water control and improvement refunding bonds, unit of development no. 9A, series 2003 are rated 'BBB' by Fitch Ratings. In addition, Fitch is assigning a 'BBB' rating on $25.09 million in outstanding parity water control improvement bonds unit of development 9B, series 1999. The bonds are expected to price the week of May 5 via a syndicate led by Citigroup Global Markets, Inc. Bond proceeds from the series 2003 bonds will advance refund the series 1996A bonds. All bonds are repayable from special assessment drainage taxes levied within the project area known as units 9A and 9B, which are coterminous. The Rating Outlook is Stable.

Units 9A and 9B comprise Abacoa, which is a large residential and commercial project in Northern Palm Beach County. Abacoa is a unique well-conceived project located in a growing and wealthy service area. There is limited residential competition with respect to price and amenities. Management is experienced in start-up assessment projects, and exhibits strong oversight and maintains conservative financial controls. Credit strengths include debt issuance limited to 90% of benefit assessment, debt service is collected six months in advance of payment dates, assessments collected on the county tax bill, and a rigorous tax lien process. The district's collection rate is approximately 99.9%. Credit concerns include the fact that the residential absorption of ultimate buildout is 35% and the retail and commercial absorption is 30%, which are at the lower end of the absorbtion curve for projects in this rating category. Also there is some developer concentration, with the largest developer, Rendina, responsible for 18% of the total assessment. The result of stress tests indicates that under the worst case scenario, there is room under the existing assessment to raise the assessment and accommodate the risk.

Abacoa is located on a 2,055 acre site in the town of Jupiter in Palm Beach County. The development plan anticipates construction of 6,073 residential units, a town center, and other commercial and workplace areas. Unit 9A comprises approximately 1,641 acres. Other portions of the area's development plan include an honors college campus for Florida Atlantic University (FAU) and a public golf course, both of which are now completed and open. Palm Beach County has constructed a baseball stadium used by major league baseball's St. Louis Cardinals and the Montreal Expos as a spring training facility as well as the local minor league team for regular season play. The stadium was completed and opened for play in February 1998.

There are numerous other recreational facilities to be built as part of the total development plan. An important amenity is the planned train station for the commuter tri-rail that links Palm Beach, Miami-Dade, and Broward Counties that will assist in absorption of residential units. While FAU, the stadium, and the planned rail-link are not part of the district assessment base, they are important components to aid in residential sales and the leasing of district commercial real estate.

The Abacoa project is based on elements of 'new urbanism', striving to create a traditional neighborhood environment, in part by building on the synergies between residential and commercial development. To date, the project's concept has been well received throughout southern Florida. The residential builder in the project is Abacoa Homes, Inc. The developer of the planned commercial portions of the project is North County Land Holdings Ltd. An additional strength of the project is the involvement of the John D. and Catherine T. MacArthur Foundation. The MacArthur Foundation is also a voting stock owner in the Abacoa Development Co. (ADC), which is responsible for the overall development of the community. The project has gained more tax-base diversity as the McArthur foundation owns 23% of total land area and 25% of drainage taxes. This is significantly reduced from 1999 levels equal to 70% of the property and 68% of drainage taxes in the project.