MOODY'S ASSIGNS MIG 1 RATING TO GREENE COUNTY'S (OH) $8 MILLION INFRASTRUCTURE IMPROVEMENT (GOLT) BOND ANTICIPATION NOTES, SERIES 2011A

AFFIRMS Aa2 RATING ON $48.8 MILLION OF POST-SALE GOLT DEBT

County
OH

NEW YORK, May 17, 2011 -- Moody's Investors Service has assigned a MIG 1 rating to Greene County's (OH) $8 million Infrastructure Improvement (General Limited Tax) Bond Anticipation Notes, Series 2011A. Concurrently, Moody's has affirmed the Aa2 rating on the county's outstanding general obligation limited tax debt, affecting $48.8 million.

SUMMARY RATINGS RATIONALE

The notes are secured by the county's general obligation limited tax pledge, subject to the 10 mill limitation. Proceeds of the notes will be used to retire bond anticipation notes maturing June 17, 2011, which were originally issued for infrastructure improvements at the Greene Town Center, a 73 acre mixed-use shopping, dining, office, and entertainment center that opened in 2005. Additionally, nearly $400,000 of the maturing notes will be refunded with cash on hand from tax increment revenues. County officials report that the town center has continued to enjoy high occupancy rates. The notes mature on November 2, 2011 and the MIG 1 rating is based on expected market access for the take out refinancing, adequate planning for alternatives in case of market disruption, and the credit quality reflected in the county's Aa2 long-term rating. Affirmation of the Aa2 rating reflects the county's steady tax base growth benefitting from the presence of Wright Patterson Air Force Base; solid financial operations with strong General Fund reserves; and modest direct debt burden.

STRENGTHS

* Expected ability to access market or other alternatives if necessary prior to note maturity

* Stable financial operations supported by strong General Fund reserve levels and ability to increase sales tax rate if needed

*Ongoing expansions at Wright Patterson Air Force Base

CHALLENGES

* Some exposure to potential state aid reductions in fiscal years 2011 and 2012

* Expected modest declines in tax base following triennial update in 2011

DETAILED CREDIT DISCUSSION

FAVORABLE MARKET ACCESS ANTICIPATED GIVEN FREQUENT ACCESS TO LONG AND SHORT-TERM CAPITAL MARKETS

The county's history of market access in both short-term and long-term capital markets is evidenced by two general obligation bond offerings and four short-term note sales in 2010. The county received six bids at its most recent competitive note sale in October 2010. The county plans to convert the current offering into long-term debt and pay down a portion with cash on hand prior to maturity on November 2, 2011. The current issuance will retire bond anticipation notes that mature on June 17, 2011, with an expected sale date of May 24, 2011, well in advance of the maturity date. Many Ohio (GO Aa1/negative outlook) counties keep a portion of their debt in notes in order to access more favorable short-term rates and to allow for flexibility to pay down principal upon annual renewal of the notes. Management is expected to make adequate provisions to address potential market disruptions at the time of the takeout financing, by planning to take out debt well in advance of final maturity and considering alternate back up plans if necessary. Should the county experience problems with remarketing the notes due to market disruption, as a back-up option, the county has sufficient reserves in its General Fund to pay off the current issuance.

SOUTHWESTERN OHIO COUNTY NEAR DAYTON BENEFITING FROM EXPANSIONS AT WRIGHT PATTERSON AIR FORCE BASE

Located in southwestern Ohio directly adjacent to the city of Dayton (Aa2/stable outlook) and encompassing the Wright Patterson Air Force Base, the county's local economy is intertwined with both the city of Dayton and the air force base. While the Dayton metropolitan area has experienced challenges due to the loss of National Cash Register, Delphi, and General Motors (corporate family rating Ba2/stable outlook) over the last five years, Wright Patterson Air Force Base has continued to see growth as a result of the 2005 Base Realignment and Closure (BRAC) recommendations. The base, which employs approximately 27,000 individuals, is in the process of an estimated $332 million in construction and renovation activity associated with the BRAC recommendations and is set to add an additional 1,200 military and civilian positions by September 2011. The multiplier effects of the expansion are expected to lead to additional regional jobs at suppliers and related businesses, as well as residential development to accommodate the new employees. The county has benefitted from this growth, particularly in the western portion which includes the cities of Beavercreek (Aa2) and Fairborn (Aa2). The eastern portion of the county is still fairly rural, and approximately 72% of the county's total acreage is agricultural. Greene Town Center and Fairfield Commons Mall, both located in the western portion of the county, serve as retail and shopping destinations for the surrounding region and support county sales tax receipts.

Population in this primarily residential county has continued to increase, growing 9.3% from 2000 to 2010. Additionally, the county's $11.3 billion tax base saw an average annual increase of 2.6% over the last five years, with a strong 8.8% growth in 2009 following its 2008 sexennial reappraisal. Given the timing of the last reappraisal, the county's tax base has not yet experienced major readjustments due to the economic downturn. As a result, the county reports that tax appeals are at an all time high in the current year (with 450 applications) and the county does expect some modest tax base decline following the 2011 triennial update. Nevertheless, we expect the county's tax base will rebound after the update and continue to show moderate growth due to the air force base expansion and multiplier effects from the expansion. Resident income levels approximate state and national norms with per capita income and median family income levels equivalent to 106.8% and 115.8% of national levels, respectively, in the 2000 census. Despite the strength of the air force base, the county is not immune to the economic challenges facing the Dayton metropolitan area, with the unemployment rate at 8.9% in March 2011, approximating both state (9.0%) and national (9.2%) rates.

STABLE FINANCIAL OPERATIONS EXPECTED TO CONTINUE

We expect the county's financial operations will remain stable given solid General Fund liquidity and generally conservative budgeting practices. Following a $1.4 million operating shortfall in fiscal 2008 due to declining revenue streams, the county implemented expenditure reductions and has realized operating surpluses in fiscal years 2009 and 2010. The county enacted a 4% reduction in its operating budget for fiscal 2009, and fiscal 2009 ended with a $1.6 million operating surplus, bringing General Fund reserves to $14.3 million, or a solid 32.4% of General Fund revenues. In fiscal 2010, the county initially budgeted for an operating shortfall and projected that sales tax receipts would continue to decline from 2009. The county reduced its budget by 2% halfway through the year to provide a cushion in case of negative variances. Positively, sales tax revenues were up 2.3% from 2009 and the county ended the year with a $2.15 million cash basis operating surplus, bringing cash balance unaudited General Fund reserves to $10.45 million, or a solid 23% of receipts. For fiscal 2011, management again budgeted for an operating shortfall of approximately $1.65 million, though expects to end the year closer to a balanced budget due to positive budgetary variances. Sales tax is currently up 3.5% over 2010, compared to a budgeted decline of 1%. The county remains committed to maintaining a year-end unencumbered cash balance of at least 10% of annual General Fund expenditures, with a target between 15% and 17%, and fund balance includes $2 million designated for budget stabilization, which the county has never needed to spend.

The county may lose some state funding in fiscal 2011 pending the outcome of the final state biennium budget for the state's fiscal years 2012 and 2013, which begin July 1, 2011. Officials expect the impact to be more modest in fiscal 2011, though may lose approximately $1.6 million in state aid in fiscal 2012. Management will look into ways to offset a decline in state aid for fiscal 2012 after the state budget is finalized and once the county begins working on its 2012 budget. We note that county commissioners maintain the ability to increase the sales tax rate, which is currently at 1%, up to 1.5% without seeking voter approval, providing significant additional financial flexibility. Sales tax revenues account for approximately 45% of General Fund revenues, with property taxes at approximately 20%. Similar to most Ohio counties, Greene County relies upon a number of voter authorized levies to support various social services, including the 1.5 mill Community Mental Health and 1 mill Council on Aging levies, both of which were renewed by a strong margin in November 2009.

MODEST DIRECT DEBT BURDEN WITH BELOW AVERAGE PRINCIPAL AMORTIZATION

We anticipate the county's overall debt position will remain moderate, given current debt levels (overall debt burden at 2.5% of full value, direct debt at 0.3%) and the ongoing use of pay-as-you-go financing for capital projects. The rate of repayment of general obligation principal is below average, with 46.1% of principal retired within ten years. The county has no additional general obligation borrowing plans at this time. In addition to the current offering, the county has $1.3 million in short-term notes outstanding, which also mature November 2, 2011. Officials currently expect to pay off approximately $700,000 of these notes with cash on hand and roll the remaining $600,000 into another series of notes prior to maturity. Short-term bond anticipation notes make up a moderate16% of the county's debt profile, representing some market access risk. We believe market access risk is mitigated by the county's management of takeout financing, including the consideration of alternate plans in the case of market disruption. Further, the county maintains adequate liquidity to pay down all of its short-term debt, if necessary. All of the county's outstanding debt is fixed rate, and the county is not a party to any interest rate swap agreements.

What could change the rating - UP

- Strengthening of tax base and demographic profile

- Maintenance of positive fund balance growth

What could change the rating - DOWN

- Material declines in fund balances and liquidity

- Deterioration of the county's tax base and demographic profile

KEY STATISTICS:

2010 Population: 161,573 (9.3% increase since 2000)

2011 Full market valuation: $11.2 billion (2.6% average annual increase since 2006)

Estimated full value per capita: $69,498

Per capita income as % of U.S. (1999): 106.8%

Median family income as % of U.S. (1999): 115.8%

County unemployment rate (March 2011): 8.9%

FY2009 General Fund balance: $14.3 million (32.4% of General Fund revenues)

Debt burden: 2.5% (0.3% direct)

Principal amortization (10 years): 46.1%

Post-sale short-term general obligation limited tax debt outstanding: $9.3 million

Post-sale long-term general obligation limited tax debt outstanding: $48.8 million

PRINCIPAL METHODOLOGY USED

The principal methodology used in this rating was Bond Anticipation Notes and Other Short-Term Capital Financings published in May 2007.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, parties not involved in the ratings, and public information.

Moody's Investors Service considers the quality of information available on the credit satisfactory for the purposes of assigning a credit rating.

Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

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Emily Robare
Analyst
Public Finance Group
Moody's Investors Service

Henrietta Chang
Backup Analyst
Public Finance Group
Moody's Investors Service

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