Fitch Rates Corpus Christi, Texas' COs 'AA-'; Outlook Stable

AUSTIN, Texas--(Business Wire)--
Fitch Ratings assigns an 'AA-' rating to Corpus Christi, Texas' (the city) $8.5
million combination tax and limited pledge certificates of obligation (COs),
series 2009. The COs are scheduled to sell via negotiation as early as the week
of July 14, 2009. The COs are secured by a property tax levy, limited to $2.50
per $100 taxable assessed valuation (TAV), on all taxable property within the
city. The COs are also payable from a limited pledge of net revenues from the
city's solid waste enterprise system.

Fitch also affirms the city's existing debt ratings as follows:

--$240.8 million limited tax general obligation (GO) bonds at 'AA-';

--$90.4 million COs at 'AA-';

Fitch also affirms the existing debt ratings of the Corpus Christi Business and
Job Development Corporation, TX as follows:

--$18.5 million sales tax revenue bonds (baseball stadium project), series 2004,
at 'AA-';

--$43.7 million sales tax revenue refunding and improvement bonds (arena
project), series 2002, at 'A+'; and

--$38.9 million sales tax revenue bonds (seawall project), series 2001, at 'A+'.

The Rating Outlook for all bonds is Stable.

The 'AA-' rating reflects the city's growing economy and tax base, sound
financial operations, moderate debt profile, and conservative stewardship.
Benefiting from resurgent tax revenues, particularly sales taxes, general fund
reserve levels have grown, while the property tax rate has been reduced. The
city's sales tax receipts and TAV continue to expand but at a more moderate pace
after notable gains in the recent housing boom. Unlike most Texas
municipalities, sales tax weakness only materialized in the last quarter of the
current fiscal period. Fitch notes this relative stability of sales tax
revenues, even during the current recession, as a principal factor in the
affirmation of the city's sales tax revenue debt ratings. Both tax and non-tax
revenue fluctuations may modestly narrow the city's financial reserves, based on
conservative assumptions. Along with the expenditure containment measures and
significant self-support for COs, these factors have allowed the city to manage
its finances and capital plan prudently while maintaining a cushion beneath its
voter-approved tax cap. Maintenance of adequate reserves is key to preserving
credit quality.

With an estimated 2009 population nearing 300,000, Corpus Christi is the eighth
largest city in Texas and the largest on the Gulf Coast. The economic base
consists primarily of petrochemicals, shipping, tourism, agriculture, and
military. The Port of Corpus Christi ranks as the sixth largest in the nation
based on tonnage and 44th in the world. Padre Island National Seashore, with
approximately 70 miles of beach, and Mustang Island State Park are leading
tourist attractions. The Corpus Christi Army Depot is the largest industrial
employer in South Texas, and several U.S. Navy installations are located in the
area. The Ingleside Naval Station, located across the bay, recently closed as
expected. Subsequently, property ownership will revert to the Port of Corpus
Christi for redevelopment, which could, over time, offset the impact of losing
the military presence. The city's unemployment rate of 6.0% for May 2009 remains
favorable and below the statewide average.

Audited fiscal 2008 results for the general fund recorded nearly balanced
results. The fiscal 2008 ending unreserved fund balance totaled $27.6 million,
or a strong 14.9% of spending, well in excess of the city's stated policy of
10%. Fiscal 2009 operations are being pressured by non-tax revenue declines and
underperforming sales tax receipts. Coupled with planned pay-go capital outlays
and building permit fee shortfalls, the city's cushion may decline by as much as
$2.9 million, leaving still adequate reserves. The fiscal 2010 budget includes
balanced operations, modestly declining sales tax receipts, and no pay hikes for
civilian personnel.

Most of the current offering will fund improvements to the city's bay front, a
major tourist draw. In May 2009, the city issued the first installment of a $153
million authorization approved by voters in November 2008 which city officials
do not anticipate will require a tax rate increase based on modest assumptions
of tax base growth. Direct debt ratios are moderate, reflecting sizable
self-support. Overall debt ratios climb to above-average levels, primarily due
to area school districts and the local community college. Payout is modestly
above average with 57% principal retirement in 10 years.

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
Jose Acosta, +1-512-215-3726 (Austin)
Gabriela Gutierrez, +1-512-215-3731 (Austin)
Media Relations:
Cindy Stoller, +1-212-908-0526 (New York)
cindy.stoller@fitchratings.com

Copyright Business Wire 2009