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Fitch Rates Clark County School District, Nevada $558MM 2007A GOs 'AA'.

SAN FRANCISCO -- Fitch Ratings assigns an 'AA' rating to Clark County School District, Nevada, approximately $558 million general obligation (limited tax) refunding bonds series 2007A. In addition, Fitch affirms the 'AA' rating on Clark County School District's (the district) $4.2 billion outstanding general obligation (GO) limited tax bonds. The bonds are scheduled to sell competitively on Feb. 7 and the par amount will depend on market conditions. NSB Public Finance is acting as the district's financial adviser. The Rating Outlook is Stable.

The 'AA' rating is based on Clark County School District's large and growing economic base, strong assessed valuation and property tax revenue gains, moderate debt levels with rapid amortization, adequate financial position supported by sizeable state funding guarantee, and good long-term capital planning and management practices. Offsetting factors include growth-related financial and capital pressures and moderated future property tax revenue growth due to statewide property tax abatement legislation. Double-digit assessed valuation gains continued in fiscal 2007, rising nearly 40%, increasing the six-year average annual growth rate to 20%. While present levels of economic growth may not be sustainable, Fitch believes the district's sound planning and forecasting as well as the state's revenue guarantee will enable the district to respond to a slowdown in revenue growth.

The district operates the nation's fifth largest school system, serving an estimated 303,000 students for the 2006-2007 school year, up by over 58,000 since 2001-2002. Enrollment growth has slowed only moderately from a peak of 5.1% in 2003-2004 to 3.9% in 2006-2007. The district is coterminous with the county and includes the cities of Las Vegas, North Las Vegas, Henderson, Boulder City, and Mesquite as well as unincorporated areas. Current projected student enrollment growth, based on a study from September 2006, is about 3.4% per year through the 2011-2012 school year.

Clark County's economy is sound. Although still concentrated in tourism and gaming, employment and economic activity in construction, professional business services, and wholesale and retail trade continue to expand and diversify the economic base. Construction employment has been fueled by the residential home market as well as commercial construction and major planned resort, casino and high-rise residential projects may sustain above average construction employment levels for the next few years. Unemployment levels remain low and county income levels closely match those of the state and national averages.

The tax base continues to be concentrated in gaming and tourism, with hotel/casinos comprising six of the top ten taxpayers and representing 9.5% of total assessed valuation. Economically sensitive taxes, including sales taxes, hotel taxes, and real estate transfer taxes, posted solid gains again in fiscal 2006; however, reflecting the slowing housing market, the budgeted growth for real estate transfer taxes, pledged to certain bond repayment, is significantly lower than the recent average. Total construction permits were about 18% lower in 2006 compared to 2005, but remained above the seven year average. Nonetheless, the region could be vulnerable to the economic impacts of a slowing housing market.

The district's financial operations have been strong, enabling it to add to the fund balance in the five fiscal years prior to fiscal 2006. Fiscal 2006 audited financials reveal a $12 million drawdown, mostly due to a planned expenditure for business operations software. Fund balance at the end of fiscal 2006 equaled $144 million, a good 8.9% of expenditures and transfers out. The undesignated portion was $36 million (2.3% of expenditures and transfers out), above the district's policy of unreserved fund balance equal to at least 2% of budgeted revenues. However, the district does intend to draw on its fund balance in the near term, including an additional $10 million for the business operations software for fiscal 2007. Other spending of previously designated amounts, mostly for non-recurring costs, results in a fiscal 2007 amended final budget with a $44 million drawdown. Nonetheless, the district's fiscal 2007 budget includes an unreserved general fund balance of $40 million, slightly above its reserve policy.

The 2007A bond proceeds will be used to refinance portions of the district's outstanding 2003D, 2004D and 2005C general obligation limited tax bonds for debt service savings. Debt levels are and should remain moderate as additional bonds are offset by a rapidly rising population and assessed values, along with rapid amortization of outstanding debt. Direct debt level, including this issuance, is $2,231 per capita and 1.6% of market value, while overall debt level is $2,421 per capita and 1.8% of market value.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
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Publication:Business Wire
Date:Feb 5, 2007
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