Fitch: Texas Gulf Coast Transportation Infrastructure Largely Unaffected By Hurricane Rita

NEW YORK--(BUSINESS WIRE)--Sept. 29, 2005--While Hurricane Rita has inflicted considerable damage to infrastructure in parts of Texas and Louisiana, the transportation infrastructure in the Houston area, the major metropolitan center in the general path of the storm, has been largely unaffected.

The Houston Airport System (subordinate lien airport revenue bonds rated 'A+' by Fitch) operates Houston George Bush Intercontinental and Hobby Airports, neither of which sustained significant damage from Hurricane Rita. Operations at both airports ceased prior to the storm, with Continental, the largest carrier at Intercontinental and Southwest, the largest carrier at Hobby, resuming service on Sunday Sept. 25. While the loss of service will result in a decline in revenue for the period, it is not expected to have a significant influence on the system's overall financial performance.

The Harris County Toll Road Authority, TX, which operates two major components of the Houston area surface transportation network, the Hardy and Sam Houston toll roads, was minimally affected. There has been no significant damage to equipment and the system is operational. The largest impact from the hurricane was from the lifting of tolls for five days (from Thursday, Sept. 22nd to Monday, Sept. 26th) to facilitate evacuation of people and response from emergency services. Reimbursements for added cost and lost revenue are expected to be sought from the Federal Emergency Management Agency (FEMA). While costs are subject to recovery, lost toll revenue is usually not subject to reimbursement by FEMA. The financial impact from lost toll revenue is expected to be less than $5.0 million. With $300 million in annual toll revenue and over 3.0 times (x) in debt service coverage, the Harris County, Texas toll road senior lien revenue bonds (rated 'A+' with a Stable Rating Outlook) and the Harris County, Texas unlimited tax and subordinate lien toll road revenue bonds (rated 'AA+ with a Stable Rating Outlook) are adequately protected at their current rating levels.

Located 84 miles east of Houston, the Port of Beaumont Navigation District (general obligation bonds rated 'A' and revenue bonds rated 'A-' by Fitch) sustained only minor damage to its facilities but is awaiting the restoration of electrical power to resume operations. Given the temporary lack of basic services in Beaumont, many residents and port workers have not yet returned, leading port officials to consider transporting in port workers from the Houston area should a ship dock at its facilities. The district's property tax base is heavily weighted towards oil and chemical refineries, led by ExxonMobil Corp., the largest taxpayer with over 26% of the district's assessed valuation. The plant reportedly suffered only minor damage but may take several weeks to restart its operations. The district's ample liquidity of over one and one-half year's of operating expenditures mitigates any credit concern over the short-term interruption of its operations.

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