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Summary: Indian River County, Florida; Miscellaneous Tax economic cycles. We have two levels of volatility assessment: macro and micro. On a macro level, we consider sales and use tax revenues to have a low historical volatility assessment given the critical nature of the underlying services. On a micro level, state payments awarded to the county are fixed at $500,000 per year and cannot be reduced without a change in authorizing legislation. As a result, there is no reason to worsen or improve on the macro assessment of volatility for this revenue type to the county. Coverage and liquidity: Adequate Pledged revenue has grown consistently over the past five years and stood at $9.8 million in fiscal 2018, a 5.0% increase from the previous year, largely a result of an increase in half -cent sales tax collections, which currently account for 87% of total pledged revenue. Fiscal 2018 pledged revenue provided very strong 8.0x coverage of MADS. However, the debt service schedule reflects the drop-off of tax pledges after 2021. Beginning with fiscal 2022, the bonds will be secured solely from the state payment, and MADS coverage is reduced to sum -sufficient 1.0x: The bond resolution allows that no additional bonds may be issued either using the state payment or the fourth -cent tourist development tax. A 1.25x historical ABT must be achieved before any new bonds secured by revenue from the local government half -cent sales tax may be issued. While we view the ABT as only adequate, the reliance on the half -cent tax revenue for operations discourages issuance of bonds to the maximum allowed under the ABT, and management has no plans to issue additional parity debt. Additional security is provided by a debt service reserve established under the bond resolution and funded to the least of 10% of the sale proceeds, MADS, or 125% average annual debt service. Ultimately, we expect that coverage will remain stable but thin at 1.0x in fiscal years 2022-2031. Obligor linkage: Mitigated Upon receipt, revenues flow directly to the revenue account (which constitutes a trust fund separate and is distinct from the issuer's other funds and is to be only used for the purpose of financing debt service or spring training facilities). Given our view of the linkage to the county, the rating on the bonds is capped at a maximum of two notches above the GO rating on the county. However, this is not a constraining factor to the rating on the series 2001 revenue bonds. Rating linkage to Indian River County Even though the primary pledged revenue source for bond repayment is from fixed annual state payments provided to the county, we are linking the rating on the bonds to the county given the obligation remains that of the county. We assess Indian River County's general operations, because we view overall creditworthiness as a key determinant of an obligor's ability to pay all of its obligations, including bonds secured by a special tax. A history of strong budgetary performance and favorable budget -to -actual variances has led to very strong flexibility and liquidity. In addition, Indian River County's strong economy supports the county's strong financial profile. Indian River County, with an estimated population of 151,000, spans 497 miles in the middle of Florida's eastern coast, approximately 100 miles southeast of Orlando and 135 miles north of Miami. The City of Sebastian is the largest in the WWW.STANDARDANDPOORS.COM/RATINGSDIRECT MARCH 29, 2)4'9 4