Fitch Rates Summit County Port Authority, Ohio Bond Fund Revs 'BBB+'

CHICAGO--Aug. 15, 2005--Fitch Ratings assigns a 'BBB+' rating to the Summit County Port Authority, OH's (bond fund program) $3,735,000 taxable development revenue bonds, series 2005D (Walter Family Limited Partnership Project). The series 2005D (the bonds) will be offered by Robert W. Baird & Co. Inc. during the week of Aug. 29, 2005. Fitch also affirms the 'BBB+' rating on the authority's $12.8 million outstanding bond fund development revenue bonds. The Rating Outlook is Stable.

The 'BBB+' rating reflects the sound structure of the bond fund, program reserve requirements that provide liquidity and first-loss protection to meet bond payments in the event of a default by the authority or future program participants, and formal loan underwriting criteria, which are expected to allow the bond fund to develop and maintain a loan portfolio whose credit profile meets the requirements of the fund rating. The bond fund, which was established under a basic trust indenture dated July 1, 2004 between Summit County Port Authority(the authority) and U.S. Bank National Association (the trustee), exists to promote economic development primarily in Summit County, Ohio by loaning revenue bond proceeds to small- and medium-sized commercial and industrial enterprises. By entering into cooperative agreements with governmental entities, the authority can also make loans for the bond fund in various counties throughout the state.

Bondholders of the current series and future bond series issued under the basic trust indenture will have a pro rata claim against all funds created under the indenture including, among other funds, the revenue fund, into which borrowers will make monthly loan repayments, the primary and program reserve funds, and the collateral fund. The bond documents require the establishment of a primary reserve fund for each series of bonds equal to at least 10% of the original par amount of the loan. Walter Family Limited Partnership Project, which is the borrower, will meet this requirement from an irrevocable letter of credit (LOC).

In addition to the primary reserves provided by the borrowers totaling approximately $1.7 million with this issue, the bond fund maintains program reserves totaling $10 million: a $3 million county grant received in February 2001; a $2 million state grant received in April 2001; and a $5 million irrevocable letter of credit (LOC). The LOC will expire on Sept. 15, 2009 and is subject to one-year extensions. The LOC provides the bond fund with a revolving line of credit that supplements the primary and other program reserves. The bank's lien on bond fund collateral is subordinate to bondholders.

After this issue, the primary and program reserves will equal 0.71 times (x) total outstanding bonds, which provide sufficient coverage to offset potential loan repayment delinquencies or default by the authority. The authority is expected to maintain at least 55% of aggregate primary and program reserves to total outstanding bonds until the bond fund attains at least seven participants. As the authority issues additional bonds, it is anticipated that the reserves will be leveraged but with the objective of maintaining the 'BBB+' rating on the bond fund.

The authority has adopted formal underwriting criteria for bond fund borrowers, which consider purpose for the project, current and historical financial strength of the borrower, knowledge and experience of management, and the source and plan of loan repayment. The underwriting criteria also include debt service coverage, leverage, and liquidity and collateral requirements.

Located in northeastern Ohio, Summit County's (general obligation bonds rated 'AA' by Fitch) growing service sector and reputation as a leading research and development center for the polymer industry continues to generate residential investment and high per capita income levels. The increasing diversification of the county's economy provides more employment opportunities and improves the overall attractiveness of the area.

Bond proceeds will finance the construction, equipping, and installation of a BMW dealership in Akron, Ohio. Lease payments from the company will be the primary security for the bonds. The bonds are also secured by the primary and program reserves mentioned above. The series 2005D bonds will be further secured by a first leasehold mortgage on the building to be constructed.

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.