Fitch Affirms Various Michigan Transportation Fund Bonds at 'AA-'; Assigns Stable Outlook

NEW YORK--(Business Wire)--
In the course of routine surveillance, Fitch Ratings has affirmed the following
Michigan Transportation Fund (MTF) bonds and notes at 'AA-'. In addition, Fitch
has assigned a Stable Outlook.

--City of Grand Blanc's approximately $1.2 million in outstanding MTF limited
tax general obligation (LTGO) bonds, series 2001;

--Manistee County's approximately $4.2 million in outstanding MTF bonds, series
2004;

--Ottawa County Board of Road Commissioners' approximately $1.4 million in
outstanding MTF notes, series 2001;

--City of Pontiac's approximately $275,000 in outstanding MTF LTGO bonds, series
1995;

--City of Taylor's approximately $3.1 million in outstanding MTF LTGO bonds,
series 2008;

--Wayne County's approximately $27.7 million in outstanding MTF LTGO bonds,
series 1998A and 1999.

The 'AA-' rating reflects a stable, constitutionally protected revenue stream
and legally required maximum annual debt service (MADS) coverage of 2.0 times
(x) on all parity bonds. The Stable Outlook reflects the stability of pledged
revenues to local governments and the statutory safeguards against changes to
the program's distribution formula. Fitch may reconsider the rating if the state
were to alter the distribution formula, or if program revenues were to decline
significantly.

Under Act 51 of 1952 (the Act), MTF bonds are secured by the local government's
share of revenues that is comprised of a gas tax equal to 19 cents per gallon
and vehicle licensing fees based on vehicle weight. Ten percent of gross
revenues are allocated to the Comprehensive Transportation Fund (rated 'AA-' by
Fitch), and net revenues are then divided between the State Truck Line Fund,
county road commissions, and cities and villages, based on a distribution
prescribed by the Act. A local government's individual share of MTF funds is
based on a local distribution formula that takes into account population, total
road mileage, and the types of roads relative to the state. Though there are no
statutory requirements for the local part of the formula, it has remained stable
over the past decade and gives more weight towards road mileage, helping protect
a city's allocation against population decline. Any decreases in MTF receipts by
local governments are due in large part to decreases in overall revenues due to
economic contraction. In the past 10 years, total revenues have declined a
modest 1.2% on average annually.

Fitch views the legal and constitutional safeguards on the MTF revenue stream as
sufficiently isolating program revenues from the risks of the state's budgetary
demands. On the local level, the physical separation of funds from the general
fund further removes the receipts from pressures of general operations.

Under the Act, annual debt service cannot exceed 50% of annual MTF receipt
ensuring a minimum of 2.0x coverage of MADS; however, coverage for most bonds is
usually higher because funds are also used to pay for routine road repair and
maintenance.

Fitch's rating definitions and 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. The issuer did not participate in the rating
process other than through the medium of its public disclosure.

Fitch Ratings
Dora Lee, 212-908-0341 (New York)
Melanie A.J. Shaker, 312-368-3143 (Chicago)
Media Relations:
Cindy Stoller, 212-908-0526 (New York)
cindy.stoller@fitchratings.com

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