Fitch Rates St. Joseph County, Indiana's $4MM LT Bonds

Business Wire, June 10, 2005

CHICAGO -- Fitch Ratings assigns an 'AA-' rating to St. Joseph County, Indiana's (the county) $4 million limited tax bridge funding bonds of 2005 (Major Cumulative Bridge Fund), scheduled for competitive sale on June 15, 2005. The Rating Outlook is Stable. Proceeds will fund the rehabilitation of the Logan Street Bridge. The bonds are payable from a limited ad valorem tax levied on taxable property within the county and other state-distributed taxes deposited in the county's major bridge fund. Fitch also affirms the 'AA-' rating on the county's $8 million outstanding limited tax major bridge fund bonds, the 'AA' rating for the county jail building corporation's $37.3 million outstanding first mortgage revenue bonds, and the 'AA-' rating for the county's $10.2 million outstanding economic development income tax revenue bonds.

The above-average ratings reflect the county's strong and diverse economic base of services and manufacturing, history of good financial performance and management, and moderate direct debt levels. St. Joseph County's location near an important national transportation corridor and proximity to Chicago promotes continued economic growth, enhancing an already broad and diverse tax base. The Outlook for the county is Stable, based on the county's limited capital needs and steady economic growth.

St. Joseph County, located in north-central Indiana, ranks as the state's fourth largest in terms of population and fifth in economic output as measured by total personal income. The county's 2003 population of 265,935 represents a 0.7% annual increase since 1990. Per capita income levels in the county equal 103% of those of the state and 94% of the national average.

The county's economy expanded at a 4.6% average annual rate over the 10 years ended 2003, in line with the state's 4.7% annual growth rate but below the 5.1% annual gain for the nation. However, investment has been strong with building permit values averaging more than $440 million annually since 1995, fostering a 7.8% annual growth rate in the county's property tax base through 2003.

Over the past 30 years, the county experienced a gradual shift in its economic makeup, from manufacturing to services. As of 2003, durable goods manufacturing still leads the economy at 18% of total personal income, followed by health care services at 12.3% and government at 10%. Overall, the service sector represented 35.7% of total economic output in 2003. Major employers in the county include the University of Notre Dame, Memorial Health System, and the South Bend Community Schools. The county's unemployment rate equaled 5.7% as of March 2005, below the state's 6.0% rate but above the 5.4% rate for the nation.

The county's financial performance has been steady as operating costs for a new jail and juvenile detention center were absorbed into the budget. Delays in property tax collections stemming from a statewide revaluation and reduced interest earnings led to a slight operating deficit in 2003. However, the general fund balance remained at 12.0% of total spending for the year, up from 10.2% in 1998. Fitch expects the county to post balanced operations for 2004.

The county's use of internal funds to finance a portion of its capital needs sustains its modest direct debt burden of $239 per capita and 0.7% of full value. Furthermore, the county's ability to pay debt service on a significant portion of its outstanding debt from such sources as county economic development, road fund, and hotel/motel taxes limits the impact on the property tax base. Overall debt levels are moderate at $1,944 per capita and 5.7% of full value.

Fitch's rating definitions are available on the agency's public web site, www.fitchratings.com. Published ratings, criteria and methodologies, and relevant policies and procedures are also available from this site, at all times. This document will remain on the public site for seven days.