Fitch Affirms Palm Beach Gardens, Florida Implied GO & Public Improv. Revs at 'AA' & 'AA-'

NEW YORK--(Business Wire)--
As part of ongoing surveillance, Fitch Ratings has affirmed the 'AA' rating on
Palm Beach Gardens, Florida's (the city) $10.6 million of outstanding general
obligation bonds (various series) and the 'AA-' on $18.2 million of outstanding
public improvement and refunding bonds, series 2003. The Rating Outlook is
Stable.

The 'AA' rating on the city's general obligation bonds reflects the city's sound
financial planning, above-average reserve levels, and healthy revenue
flexibility. In addition, the rating incorporates the city's low direct debt
levels and lack of additional borrowing plans, a very affluent and largely
residential tax base, and comparatively low levels of unemployment.

The 'AA-' rating on the public improvement revenue and refunding bonds reflects
the city's sound underlying credit quality and the city's covenant to budget and
appropriate in its annual budget each fiscal year non-ad valorem revenues
sufficient to pay debt service.

Available fiscal 2009 non-ad valorem revenues are estimated at $25.3 million or
11.2 times (x) maximum annual debt service (MADS). The strong debt service
coverage reflects the substantial role that non-ad valorem revenue serves in
funding city services. The city has no outstanding debt issues secured by
specific sources of available revenue which would be senior to the city's public
improvement revenue bonds. The city has covenanted that it will not issue
additional debt secured by non-ad valorem revenues unless the non-ad valorem
revenues for the previous fiscal year are greater than 2.0x MADS.

The city closed fiscal 2008 with an unreserved fund balance equal to $24.4
million or 36% of total spending, up from $17.7 million or 27% of total spending
in fiscal 2006. A surplus of $2.5 million is expected for fiscal 2009; however,
the bulk of the surplus essentially funds a mid-year budget amendment that
established a reserve fund securing the public improvement revenue and refunding
bonds following the rating the downgrade of the reserve fund surety provider.

The city is heavily dependent on ad valorem taxes to fund operations and, as
such, has faced pressure from property tax reform measures and tax base declines
due to the downturn in the housing market. The city has responded by eliminating
positions, freezing wages, increasing employee contributions for health
coverage, and scaling back capital spending, travel, and training. The fiscal
2010 budget also appropriates approximately $1.25 million of fund balance, but
reserves would remain at or close to 30% of spending. The city maintains a
healthy degree of revenue-raising flexibility via utility taxes, communication
service taxes, and fees for solid waste and storm water, which it estimates
could raise up to $14 million per year.

The city has consistently produced a very low level of unemployment. Real estate
and construction thrived during the city's recent population boom, but job
losses continue to mount within these sectors due to the decline in the housing
market and recession. The city's employment base has shrunk by 5.2% over the
past 12 months; however, unemployment remains comparatively low at 7.1% as of
July 2009. The regional economy should also benefit from the newly established
presence of The Scripps Research Institute and Max Planck Society which have the
potential to attract high-quality jobs and younger professionals to the region.

Direct debt levels remain very low. The overall debt burden remains more
moderate on a per capita basis at $4,124 though this risk is moderated by the
very high wealth of city residents. The city does not plan to issue additional
debt in the near term.

Additional information is available at 'www.fitchratings.com'.

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Fitch Ratings, New York
Michael Rinaldi, 212-908-0833
Rachel Barkley, 212-908-1514
or
Media Relations:
Cindy Stoller, 212-908-0526
Email: cindy.stoller@fitchratings.com

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