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MOODY'S: BREVARD COUNTY REFERENDUM HEIGHTENS CONCERNS OVER WILLINGNESS TO REPAY CERTIFICATES OF PARTICIPATION

 NEW YORK, March 17 /PRNewswire/ -- On March 16, the Brevard County electorate voted, in a non-binding referendum, to continue the occupancy of the government operations center located at Viera. However, the second question requesting a general obligation bond authorization to refinance the obligations issued to build the center was defeated. The Board of County Commissioners at its next scheduled meeting on March 23 is scheduled to discuss the outcome of the vote. Although the board will make the ultimate decision whether to vacate the facility, board members, in public statements, have indicated their willingness to comply with the decisions of the voters. The government center was financed with $23.8 million of certificates of participation (COPs) issued in 1989. The COPs were insured at issuance by Bond Investors Guaranty (BIG) and subsequently reinsured by the Municipal Bond Investors Assurance Corporation (MBIA). Moody's currently has no ratings on any of the county's outstanding, uninsured debt.
 Both the location of the administrative complex as well as the non- voter approved mechanism to finance the facility have been the focus of intense local political debate. These debates have influenced recent elections to the county commission by candidates advocating vacating the facility. While the commissioners have indicated their intent to do otherwise, a vote to vacate the government center would be the first step in a process that could lead to non-appropriation of the county's lease payments on the COPs.
 Moody's considers COPs structured as leases to be contractual obligations which, while not legally considered debt, are analyzed and evaluated as long-term obligations of the issuer. Ratings on COPs, as well as other long-term instruments, are based on the issuer's willingness, as well as ability, to repay the obligation in full and on time. In Moody's view, a decision to place on the ballot the question of continued appropriations for lease or installment payments, after an issuer has sold COPs into the market with the expectation of its continued payments, raises serious questions about its willingness to honor its obligations. The fact that a COP issue is insured -- and, therefore, bondholders are offered a means of full and timely payment via an alternative repayment source -- should not, in the opinion of Moody's, be construed by an issuer as offering it an acceptable alternative to meeting its own responsibilities to the holders of its obligations.
 -0- 3/17/93
 /CONTACT: John Incorvaia, vice president - Southeast ratings, 212-553-0501; Jamie Burr, vice president/assistant director - legal analysis, 212-553-4036; or Katherine McManus, vice president/manager - legal analysis, 212-553-4036, all of Moody's Public Finance Department/


CO: Brevard County ST: Florida IN: SU: RTG

GK-AH -- NY061 -- 7078 03/17/93 13:22 EST
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Date:Mar 17, 1993
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