Fitch Rates University of Central Florida Parking Bonds 'A'; Upgrades Outstanding to 'A'

NEW YORK--Dec. 6, 2004--Fitch Ratings assigns an 'A' rating to the $18,550,000 State of Florida, Board of Regents, University of Central Florida (UCF) parking facility revenue bonds, series 2004A and upgrades to 'A' from 'A-' the rating assigned to outstanding UCF parking facility revenue bonds (listed below). The Rating Outlook is Stable.

Bond proceeds will be used to pay construction costs of a multi-level parking garage with approximately 1,600 spaces on the main campus in Orlando. The parking facility will be constructed on an existing paved parking lot containing 564 surface parking spaces. Proceeds will also be used to refund a portion of the outstanding series 1995 bonds of approximately $4,745,000, to purchase a municipal bond insurance policy, to purchase a reserve account surety bond and to pay costs of issuance. The bonds are expected to be sold on a competitive basis during December.

The 'A' rating is primarily supported by a mandatory fee imposed on all students and a debt service reserve fund. Prior to fall 2002, the parking bonds were primarily secured by the sale of parking decals to students. Effective fall 2002, UCF began collecting a transportation access fee, which is a mandatory fee charged to all students and based on credit hours taken by students. The fee was initially set at $3.90 per student credit hour. The fee has not been raised since inception and projected revenues through fiscal 2009 do not include any fee increase.

In fiscal 2002, the parking system's gross revenues were $5 million and operating expenses were $2.1 million. With the implementation of the transportation fee in fiscal 2003, gross revenues grew to $7.8 million and expenses were $2.6 million. Along with the implementation of the transportation fee, UCF agreed to provide a shuttle service. For bondholders, the net pledged revenues do not include a deduction for the shuttle service expense. Projected coverage of maximum annual debt service (MADS) from pledged revenues for fiscal 2005 is 1.69 times (x). In Fitch's analysis, the shuttle service expense is considered an operating expense. As a result, the projected MADS coverage for fiscal 2005 declines to 1.01x. The coverage is projected to improve to 2.0x from pledged revenues and 1.15x from net revenues by fiscal 2009. Fitch believes that the assumptions used in the projections, which include 2.5% enrollment growth and 4% expense growth, are reasonable. Over the past five years, the annual average enrollment growth has been 6.4%.

The rating is also supported by UCF's fundamental credit strengths, which include increasing enrollment, a low debt burden and historically consistent funding from the state. UCF's enrollment is projected to continue growing, which is positive; however, the growth will require additional facilities that may be financed through university debt or through debt issued by third parties.

The University of Central Florida, located in Orlando, is one of 11 institutions of higher learning in the State University System of Florida (currently rated 'AA' by Fitch). Fall 2004 enrollment was 42,568 and has grown by 27% since fall 1999.

Outstanding Bonds:

State of Florida, Board of Regents, University of Central Florida (UCF) parking facility revenue bonds,

-- Series 1995 upgraded to 'A' from 'A-';

-- Series 1997 upgraded to 'A' from 'A-';

-- Series 1999 upgraded to 'A' from 'A-';

-- Series 2001 upgraded to 'A' from 'A-'.