Fitch Rates Chester County, PA's GOs 'AAA'; Outlook Stable

NEW YORK--(Business Wire)--
Fitch Ratings assigns an 'AAA' rating to the following Chester County, PA
(county) general obligation (GO) bonds:

--$30 million GO bonds, series A of 2010.

In addition, Fitch affirms:

--$455.082 million in outstanding GO bonds at 'AAA'.

The Rating Outlook is Stable.

The bonds are expected to sell via negotiation on April 13.

RATING RATIONALE:

--The county maintains solid financial operations and reserve levels; budgeting
practices are conservative.

--Management is strong and fiscally prudent and benefits from planning
strategies and policies.

--The county benefits from high wealth and income levels.

--The large, diverse tax base provides significant stability.

--The county's future capital needs are manageable with moderate overall debt
levels but slower than average amortization.

KEY RATING DRIVERS:

--Maintenance of county's solid financial operations and flexibility;

--Continued growth in the county's tax base supported by pending commercial and
industrial development.

SECURITY:

The bonds are general obligations of the county payable from its tax and other
general revenues. The county covenants it will budget and appropriate the amount
of debt service due on the bonds and has pledged its full faith, credit and
taxing power unlimited as to rate or amount.

CREDIT SUMMARY:

The county is located 30 miles west of Philadelphia and is home to a population
of approximately 491,000. Population growth has been strong since 2000 at 13.4%,
and while some continued growth is expected, Fitch believes it will be at a
slower pace. Wealth levels remain strong as demonstrated in the county's high
market value per capita of $140,223 in 2008. The county's ongoing trend of
positive employment growth is evidenced by current unemployment levels that rank
below both the state and national averages. While the professional and business
services, education and health care and financial, insurance and real estate
sectors dominate private employment, strong gains in the trade, transportation
and leisure and hospitality as well as the retail sectors are evident. The
county benefits from a highly educated work force as approximately 42% of
residents reportedly possess college degrees. The county's unemployment rate of
7% in January 2010 remains well below the state and national averages of 9.5%
and 10.6%, respectively.

The county's fund balances remain strong due to its conservative budget
practices, expenditure controls, and healthy flow of revenue driven by an
expanded property tax base. For fiscal year 2009, the county projects that it
will add $5 million to its unreserved fund balance, bringing the total
unreserved fund balance to $40 million. The county reduced operating expenses in
2009 through position eliminations, a voluntary work schedule reduction program,
and the restructuring of certain operations. Property tax receipts, the county's
largest revenue source, came in close to budget. The 2008 unreserved fund
balance totaled $35 million or 25% of expenditures following a small operating
deficit of $3.3 million. The county's fiscal 2010 budget again reflects its
conservative budgeting practices with additional expenditure cuts, a minimal
increase in market value growth, and several new revenue enhancements.

The county's wealthy property tax base has expanded steadily as property values
grew at double-digit rates from the beginning of the decade through 2006.
However, the rate of growth declined to 8.4% in 2007 and 2.1% in 2008, due to an
overall slowing in the local housing market. In 2009, the county experienced a
slight decline of 1.3% in the tax base. Despite the housing market pressures,
the county continues to add new commercial development sites, including a new
mixed-use project known as Uptown Worthington, which is scheduled to open
several new retail stores in the upcoming months, including a Wegman's and
Target, which should mitigate significant further declines.

The county's direct debt burden is low at $930 per capita and 0.70% of market
value (MV). Debt levels are higher on an overall basis, with overall debt per
capita at $5,064 and 3.6% of MV when adding in the debt of the county's local
school districts. Fitch believes the county's higher overall debt levels are
attributable in part to generally limited amount of available state monies for
funding local school districts. As such, the debt issued by the local districts
provides county students with high-quality education and facilities desired by
district residents. In addition, the county's pension plan is adequately funded,
and OPEB costs are limited due to the elimination of benefits beginning in July
of 2006. Amortization rates are slightly below average with 44.2% retired in 10
years resulting from a prior Build America Bond issuance.

Applicable criteria available on Fitch's web site at 'www.fitchratings.com':

--'Tax-Supported Rating Criteria', dated Dec. 21, 2009;

--'U.S. Local Government Tax-Supported Rating Criteria', dated Dec. 21, 2009.

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

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE '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
Ann G. Flynn, 212-908-9152
Christopher Hessenthaler, 212-908-0773
or
Media Relations:
Cindy Stoller, 212-908-0526
Email: cindy.stoller@fitchratings.com

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