Fitch Rates Normal, Illinois' $10MM GO Bonds 'AA+'

CHICAGO--(Business Wire)--
Fitch Ratings has assigned an 'AA+' to the Town of Normal,
Illinois' $10 million general obligation (GO) bonds, series 2008. The
bonds are scheduled for negotiated sale on or about Aug. 4, 2008. An
unlimited GO pledge secures the bonds. Proceeds will finance capital
improvements in the town's uptown area. Fitch also affirms the 'AA+'
rating on about $64.4 million of outstanding GO debt. The Rating
Outlook is Stable.

The 'AA+' rating is based on the town's stable economy, rigorous
financial planning that supports consistently strong financial
results, moderately high overall debt burden, and slow debt
amortization. While the town of Normal is a home-rule municipality and
not bound by tax rate limitations, its stable financial results
reflect its diverse economy and conservative financial management.
Having a strong university and financial services base has limited
cyclical influences associated with the manufacturing sector and
maintained below-average unemployment rates.

As part of the Bloomington-Normal metropolitan area in central
Illinois, the town has expanded at a steady pace through its strong
university community (led by Illinois State University and Illinois
Wesleyan University), Mitsubishi Motors North America, Inc.'s
manufacturing division, BroMenn Healthcare, and State Farm Insurance
Companies (headquartered in Bloomington). Although unemployment rates
have increased in the past year, growing to 4.4% in May 2008 from 3.2%
in May 2007, the town's rate remains below state and national figures
of 6.4% and 4.8%, respectively, in the same month.

Sales taxes, utility taxes, property taxes and state-distributed
income taxes are leading components of the town's diverse budgetary
revenue stream. The limited dependence on property taxes allows the
town to maintain tax rates that are among the lowest of central
Illinois cities. In the last five years, the town's general fund has
improved despite increased contributions for capital projects. Results
from the fiscal year ended March 31, 2007 indicated an unreserved,
undesignated general fund balance equal to $9.4 million, or 22% of
spending, compared to fiscal 2001's $4.8 million (18.3%). Preliminary
results for fiscal year 2008 indicate the town achieved a small
general fund surplus. Though the town faces a slightly slowed rate of
growth due to sales tax activity in fiscal year 2009 to date, Fitch
expects fund balances will remain very strong.

The capital program is dedicated to the uptown renewal project, a
major investment in the town's historic downtown area and the most
significant capital project in the past decade. The plan consists of a
hotel and conference center, multi-modal transportation center, and
substantial roadway and infrastructure improvements to accommodate the
new facilities. The largest component is the hotel's conference center
and parking, currently under construction. Also incorporated in the
plan is a parking garage to accommodate existing traffic and future
needs; a mixed-use development which incorporates condos, office and
retail space; and a multi-modal transportation center, most of which
is to be funded using federal and state grants. While the hotel and
conference center are currently under construction, the transportation
center will not proceed until federal monies are in place and is
likely to be the last significant portion of the project. The town
anticipates issuing an additional $6 million in GO bonds in 2009 to
complete the uptown plan.

The town's direct debt burden with this issue equals $1,439 on a
per capita basis and 3.3% of property market values. Overlapping debt,
consisting mostly of school district debt, raises the overall debt
burden to a moderately high $3,357 per capita and 7.7% of property
market values. Although the debt burden has increased in per capita
terms, sales, hotel/motel, and tax increment revenues are the expected
funding source for debt service.

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
A. Paul Sadlowski, +1-312-368-3198 (Chicago)
Melanie A.J. Shaker, +1-312-368-3143 (Chicago)
Media Relations:
Sandro Scenga, +1-212-908-0278 (New York)

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