Fitch Rates Prince George's County (Maryland) $110MM GOs 'AA+'; Outlook Stable

NEW YORK--(Business Wire)--
Fitch Ratings assigns an 'AA+' rating to Prince George's County
(the county's) $110,000,000 general obligation (GO) Consolidated
Public Improvement Bonds, Series 2008. The bonds are scheduled to sell
competitively on approximately June 4th, with proceeds funding various
public works projects.

Fitch also affirms the following outstanding ratings at 'AA+':

-- Prince George's County $1 billion GO bonds;

-- Maryland National Capital Park and Planning Commission
(M-NCPPC) (Prince George's County) $104 million GO bonds.

The Rating Outlook is Stable.

The 'AA+' rating reflects Prince George's County's solid reserves,
growing economy, and moderately low debt levels. Although earlier this
decade the county generated general fund surpluses in spite of limited
revenue-raising flexibility from its top two revenue sources (property
and income taxes), the county ended fiscal 2007 with a budget deficit
and projects negative general fund operations in fiscal 2008. Through
the implementation of tax rate increases and stringently controlled
expenditures, Prince George's County projects a balanced general fund
budget in fiscal 2009. Further demonstrations of the inability to
maintain structural surpluses or deterioration of current reserves may
have credit negative implications. Economic prospects are strong, as
several major commercial and residential developments are under way,
likely providing additional tax revenue for several years due to
Maryland's three-year phase-in of property assessments. The county's
debt burden should remain affordable given its rapid amortization and
projected tax base growth. The Rating Outlook is Stable.

Located adjacent to Washington, D.C., Prince George's County has
an economic base that is centered on vital governmental bureaus and
higher education, including Andrews Air Force Base and the University
of Maryland. Completion of the initial phase of the $2 billion
National Harbor project along the Potomac River and development of
other hotel and retail areas mark a significant breakthrough for a
county historically underserved by these sectors. Median household
income in 2006 was comparable to the state's and above the national
average by 36%. The county's March 2007 unemployment rate (3.7%) was
on par with the state's average but below the national rate of 5.1%.

The Washington D.C. metropolitan area continues to struggle with
the effects of the housing market downturn. The region has seen
significant increases in foreclosures, and declining home prices are
projected over the next five years. In Prince George's County, AV
growth is projected to remain in the double digits through at least
fiscal 2010, partly attributable to the three year phase-in of
reassessment growth, the homestead tax credit, and the relatively
strong growth of the commercial base. Increased condominium sales
prices, attributable to purchases at National Harbor, stand in
contrast to the flat or declining prices of other residential
offerings. Fitch expects demand for housing in the county to remain
strong given the prime location and relative affordability in the
Washington D.C. metropolitan area.

Prince George's County has attained solid reserves through
conservative revenue budgeting and an emphasis on long-term structural
balance, in spite of a charter mandated tax cap and other limitations
on the county's revenue raising ability. After at least four years of
increasing fund balances, the county decreased its fund balance in
fiscal 2007 and projects a subsequent decline in fiscal 2008; a
significant portion of the decline is attributable to decreased
transfer and recordation taxes. The county projects that stringent
measures to control expenditures and increased income tax and
recordation tax rates will restore structural stability to the fiscal
2009 budget. Fitch will continue to monitor if the county can maintain
positive financial operations, given increased budgetary pressure and
limited revenue raising flexibility. Aggregate reserves remained a
strong 22.2% of spending at the close of fiscal 2007, comprising a
charter contingency of 5% of the budget and the unreserved general
fund balance inclusive of a stability reserve equal to 2% of the
budget.

Conservative debt management, including frequent affordability
reviews, rapid amortization, and the ability to reduce capital
improvement costs in periods of economic stress have contributed to
moderately low debt levels. The county's overall debt burden should
remain moderate over the life of the CIP given the projections for
future tax base growth and the county's rapid principal amortization
rate of approximately 65.1% of debt retiring within ten years.
Furthermore, surcharges linked to residential development will offset
a portion of the debt service cost. The proposed $2.0 billion,
six-year county and school capital improvement program (CIP) through
fiscal 2014 continues to be heavily weighted toward school
construction and renovation as well as transportation. Overall debt
levels, including general obligations (GOs) of the Maryland National
Capital Park and Planning Commission that carry an unlimited ad
valorem tax guaranty from the county, are moderately low at 1.6% of
market value and $1,604 per capita. The county's funded position of
its pension systems for police and fire are well below average at
approximately 65% and 60%, respectively. Fitch will continue to
monitor the funded status of the plans and expects the county to
continue its past practice of fully funding its annually required
contributions.

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.

Fitch Ratings, New York
Barbara Ruth Rosenberg, 212-908-0731
Alexandra Knight, 212-908-9181
or
Media Relations:
Cindy Stoller, 212-908-0526

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