Fitch Rates Chicago Park District, Illinois' $167MM GOs 'AA+'

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has assigned an 'AA+' rating to the following Chicago Park District, Illinois (the district) issues:

--$35 million general obligation (GO) unlimited tax park bonds, series 2008E (special recreation activity alternate revenue source);

--$20 million GO limited tax park bonds, series 2008F;

--Approximately $40 million GO limited tax refunding bonds, series 2008G;

--Approximately $32 million GO unlimited tax refunding bonds, series 2008H;

--Approximately $40 million GO unlimited tax refunding bonds, series 2008I (personal property replacement tax alternate revenue source).

The series 2008F-I bonds are expected to price via negotiated sale the week of Nov. 17. The series E bonds are expected to price by year-end. Unlimited tax bonds are secured by the district's full faith and credit pledge without limitation as to rate or amount, while limited tax bonds are payable from ad valorem taxes levied without limitation as to rate, but limited as to amount, against all taxable property in the district. Series 2008E will finance accessibility improvements to park facilities, while series 2008F will finance a portion of the district's ongoing capital plan. Series 2008G, 2008H, and 2008I will all refinance existing outstanding GO debt for debt service savings. In addition, Fitch affirms the 'AA+' rating on the district's approximately $820 million of outstanding GO debt. The Rating Outlook is Stable.

The rating reflects the district's limited purpose, improved financial performance and reporting, and the city of Chicago's broad economy and substantial tax base. District management has focused on achieving operating efficiencies and restoring balance in its operating fund. The district owns and manages over 7,600 acres of park land in its jurisdiction, which is coterminous with the City of Chicago (GO bonds rated 'AA' by Fitch). Tax base growth has been robust in the past several years, but the housing market has slowed significantly in 2008 as the area contends with rising mortgage delinquencies and foreclosures. Also, the city unemployment rate climbed to 7.4% in September 2008 from 6.3% in September 2007, as losses particularly in financial services employment outpaced labor force absorption.

The district retains substantial financial flexibility as both park programs and workforce can be scaled according to available resources. Aiding fiscal flexibility is the 2006 sale of parking garages, which enabled the creation of long-term reserves. With the unrestricted balance from this reserve, fund balance exceeds 50% of spending. Although 2008 revenues have come in slightly under budget, the district has cut back on spending commensurately and continues to monitor performance closely. Fitch expects fiscal 2009 to be challenging for the district, but anticipates continued cost reductions and limited revenue enhancements will support continued healthy fiscal results.

The direct debt burden is low, but overall debt is moderate at $4,919 per capita or 4.2% of market value. The district has updated its five-year capital improvement plan; additional borrowing is expected to total about $150 million, which will increase the debt burden only minimally.

Fitch issued an exposure draft on July 31, 2008 proposing a recalibration of tax-supported and water/sewer revenue bond ratings which, if adopted, may result in an upward revision of this rating (see Fitch research 'Exposure Draft: Reassessment of the Municipal Ratings Framework'.) At this time, Fitch is deferring its final determination on municipal recalibration. Fitch will continue to monitor market and credit conditions, and plans to revisit the recalibration in the first quarter of 2009.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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.