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Fitch Upgrades Johnson County, Texas' GOs and COs to 'AA-'.

AUSTIN, Texas -- Fitch Ratings has upgraded the following ratings for Johnson County, Texas (the county) to 'AA-' from 'A+' as part of its continuous surveillance effort:

-- $10.4 million general obligation (GO) bonds; -- $12.3 million certificates of obligation (COs).

The Rating Outlook is Stable.

RATING RATIONALE:

-- The county's consistent trend of positive operating performance has resulted in a build-up of solid financial reserves; -- The county benefits from its proximity to the Dallas/Fort Worth metropolitan area; -- Taxable assessed valuation (TAV) growth has been rapid while the tax base composition has become more concentrated in natural gas; -- The county's direct debt burden is modest with rapid amortization; the overall burden is moderate.

KEY RATING DRIVERS:

-- Given the county's increased tax base concentration, maintenance of solid reserves to cushion the impact of potential volatility in market valuations of natural gas is a key element in maintaining the current rating; -- Due to the demands being placed on the county and overlapping jurisdictions as a result of ongoing population growth, maintenance of a manageable debt burden is essential to the rating.

SECURITY:

The GOs and COs constitute a general obligation of the county, payable from the collection of property taxes levied against all taxable property within the county, limited by law to $0.80 per $100 assessed valuation.

CREDIT SUMMARY:

With an estimated population of nearly 160,000 and encompassing 740 square miles, Johnson County is located about 30 miles south of downtown Fort Worth. The city of Cleburne (GOs rated 'A+' by Fitch) is the county seat and principal commercial center. Other municipalities within the county include Burleson (GOs rated 'A+' by Fitch), Alvarado, Joshua, Keen, and Venus. Affordable land along major highways that cross the county's boundaries and provide easy access to the nearby Dallas-Fort Worth metro area has attracted significant residential development and a diverse local manufacturing and distribution employment base. The Texas Department of Transportation plans to begin, in 2010, an extension of State Highway 121 which will provide an additional connection to Tarrant County. Recent discovery that its location is within the Barnett Shale, one of the nation's largest natural gas fields, has added substantial values to its tax base, most notably over the last three fiscal years.

The county population has steadily grown by an annual average rate of 2.1%, the same rate as the state; but, slower than the DFW metro area. While the county's unemployment rate has historically been below the state and national levels, data for October 2009 reflects a large jump in Johnson County's unemployment rate to 9.1% from 4.8% a year earlier. It is now higher than the state's 8.1%, and slightly lower than the national level of 9.5%. Wealth levels as measured by median household income are higher than the state and national levels.

The county's financial performance has been very strong, benefiting from the recent tax base expansion. Adding to fund balance annually over the past five fiscal years, the county's unreserved fund balance grew to a high $14.5 million, or 38% of spending in fiscal 2008, from $3.3 million, or 15.3% of spending in fiscal 2004. Management estimates adding another $1.8 million to fund balance in fiscal 2009 and has adopted a balanced budget for fiscal 2010.

Plans for future debt issuance are limited. A project to construct an adult probation facility with an estimated cost of $4 million is the only project planned in the near horizon. The county commission has not yet determined the source of funding for this project, but is considering funding with available cash.

Applicable criteria available at 'www.fitchratings.com':

-- 'Local Government General Obligation Rating Guidelines' (March 22, 2007).

Additional information is available at 'www.fitchratings.com'

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. 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:Dec 17, 2009
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