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9/24/2014 Fitch Ratings I Press Release LIMITED LTGO COVERAGE: The 'A-' rating on the county's limited GO bonds reflects the limited 0.5 mill ad valorem pledge that, if fully levied, would generate about 1.38x coverage of MADS. The tax base appears to have turned a corner with modest gains in fiscals 2014 and 2015, enhancing the level of rating stability for these bonds. RATING SENSITIVITIES SPRING TRAINING FACILITY: The rating is sensitive to a material change in coverage resulting from additional issuance or a shift in the performance of the TDT and/or sales tax revenue. Furthermore, the rating is sensitive to changes in the credit qualityof the state of Florida, as it pertains to the pledged revenue component comprising the annual distribution of funds for new or retained professional sports facilities. LTGO BONDS: If the recent recovery of the tax base continues, a positive rating action could be warranted; conversely, if the recentrecoveryfails to be maintained, a negative rating action is possible. IMPLIED ULTGO: The 'ANN rating is primarily sensitive to changes in the county's prudent management practices, verystrong reserves, and affordable debt burden. CREDIT PROFILE Indian River County is located on the Atlantic coastline, approximately 135 miles north of Miami and includes the cities of Vero Beach and Sebastian. The city's population has shown strong growth with a 2013 estimate of 141,994, up 26% since the 2000 census. AMPLE FINANCIAL RESOURCES In Fitch's view the county's financial management and resources serve as the linchpin of its implied ULTGO rating. The county ended fiscal 2013 with an operating deficit (after transfers) of $616,459 and used an additional $3.8 million of unrestricted fund balance to payoff a portion of its outstanding bonds. Despite the draw in fiscal 2013, reserve levels remain robust with unrestricted fund balance totaling $47.7 million or 53.6% of spending. The balance sheet is flush with cash totaling $49.1 million, more than 12x total liabilities. The county has well-defined and prudentfund balance policies. The county aims to maintain an unassigned fund balance ata minimum of 20% of budgeted operating spending or 2.5 months of expenditures. By policy the county shall maintain an additional 5% each for budget stabilization and emergencies. The fiscal 2014 budget was balanced with a $900,000 appropriation of general fund balance. Year-to-date results have been favorable and management is currently projecting breakeven results in the fund balance. The fiscal 2015 budget was recently adopted withouta planned use of fund balance. The proposed millage rate of 3.34 leaves ample room below the state's 10 mill limitation. Ad valorem tax revenues are the primary revenue source accounting for 61.5% of budgeted general fund revenues. LIMITED ECONOMY The economyoflndian River County is one historically based in agricultural production (particularly citrus) and tourism. Ample developable waterfront land and a relative lack of congestion serve to attract a significant wealthy retiree population, which is evident in the per capita income levels approximately 13% higher than the state, high market value per capita, and above-average median age. The county's retail and service -based economy was extremely vulnerable to the effects of the national recession. The county's July 2014 unemployment rate of 8.5% has improved over recent years but remains above state and national averages. DEBT TO REMAIN LOW At 0.9% of market value and $1,128 per capita, the county's overall debt burden (including overlapping obligations of the county school board) is considered very low by Fitch. Annual debt service consumes just 5% of the budget- an affordable burden made more noteworthy by the fact that more than 90% of outstanding debt https:/Iw w.fitchratings.cornicreditdesWpress_releases/detaiI.cfm?print=l&pr_id=881294