U.S. Muni Surveillance: Fitch Affirms Polk County, Florida's Utility System Revs at 'A+'

TAMPA, Fla.--(Business Wire)--
As part of ongoing surveillance, Fitch Ratings has affirmed the 'A+' rating on
the following utility system revenue bonds of Polk County, Florida (the county):

--$5,940,000 utility system revenue bonds, series 1997B;

--$49,770,000 utility system revenue bonds, series 2003;

--$40,340,000 utility system revenue bonds, series 2004A;

--$15,670,000 utility system revenue bonds, series 2004B.

The Rating Outlook is Stable.

The 'A+' rating reflects the county's utility systems' solid historical debt
service coverage and sound legal provisions, including bondholders' lien on
gross system revenues and connection charges. The rating further incorporates an
exceptionally high residential rate structure relative to county median income
levels and capital plans that, while manageable, will significantly increase the
debt burden and reduce debt service coverage. The county is emerging from a
period of rapid growth and Fitch expects that officials will adapt to a
potentially reduced rate in future growth patterns and take necessary measures
to generate adequate revenues to support debt service payments, cash
requirements and infrastructure needs while maintaining a level of financial
flexibility consistent with the current rating level.

The Polk County Utilities Division (PCUD) provides water service to about 55,782
customer accounts and wastewater service to around 38,448 customer accounts in
unincorporated Polk County. The county's population grew 19.4% during the 1990s
and 18% since the 2000 census.

While customer growth was rapid at roughly 6% annually between 2003 and 2008,
growth has slowed considerably and officials project customer account growth of
1% annually for the next several years. Although the county's economy has been
historically focused on citrus production and phosphate mining it has shown some
diversification into light manufacturing and distribution, benefiting from its
location between Tampa and Orlando and good transportation links. Unemployment
rates are typically higher than state and national averages and the county's
10.3% jobless rate in April 2009 is more than double its April 2008 rate.

Coverage of maximum annual debt service (MADs) by pledged revenues was a solid
2.6 times (x) including connection charges and 1.8x excluding those charges in
fiscal year 2008. Financial flexibility is ample; the system ended fiscal year
2008 with 587 days cash on hand and expects to add to that balance in fiscal
year 2009. Water and sewer rates are high relative to median household income at
2.5% and will increase with 5% automatic annual rate increases in place through
fiscal year 2011. Fitch expects that rates may increase further given the need
to service additional debt planned in the near term. Capital needs are planned
for five years and total $225 million through fiscal year 2013. Planned parity
financings include $67 million and $24 million in fiscal years 2010 and 2011,
respectively, which will nearly double the system's current debt burden. Water
supply and treatment and wastewater treatment meet system needs for at least the
medium term. Water supply is drawn from the Floridan Aquifer.

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
Kelly McGary, +1-813-224-0492 (Tampa)
Rachel Barkley, +1-212-908-0514 (New York)
Media Relations:
Cindy Stoller, +1-212-908-0526 (New York)
cindy.stoller@fitchratings.com

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