NEW YORK--(BUSINESS WIRE)--Fitch assigns a rating of 'AA-' to Cabarrus County (the county), North Carolina's estimated $57.1 million certificates of participation (COPs), series 2008C. The COPs are scheduled to price via negotiated sale on September 24. In addition, Fitch affirms the rating on the county's $127 million outstanding general obligation (GO) bonds at 'AA' and the rating on the county's $182 million outstanding COPs at 'AA-'. The Rating Outlook is Stable.The 'AA-' COPs rating reflects the county's solid credit characteristics, the essentiality of the mortgaged property, and sound legal provisions. The long-term 'AA' GO rating incorporates Cabarrus County's healthy financial flexibility and its broad and expanding economy. The county's rapidly growing population has resulted in significant capital pressures, especially in the area of school construction, a trend which Fitch Ratings believes will continue. The Stable Rating Outlook incorporates Fitch's belief that the county's efforts to address school capital needs will be successful and that debt service levels, although high, will remain affordable despite continued growth-related needs.
The current COPs offering will be used to finance the construction of a 460-bed jail for county inmates. Under an installment financing agreement, the county will make payments, subject to annual appropriation, equal to debt service to the Cabarrus County Development Corporation (CCDC), a non-profit corporation created to assist the county in financing public projects. Additional security is provided under a deed of trust that grants the corporation a benefit of first lien of record on the land on which the jail's residential tower will be located.
Cabarrus County, located 18 miles northeast of Charlotte in the Piedmont region of North Carolina, has experienced rapid population growth over the past two decades and continued diversification and expansion of its economy. The county's population grew by a high 32% in the 1990s and is estimated to have risen another 25% since the 2000 census, nearly double the state's 13% escalation. Aided by close proximity to Charlotte, the county's economy has shifted somewhat from its traditional emphasis on farming and textiles and now includes manufacturing, retail, and warehousing/distribution. Also located in the county is the 1.4 million square foot Concord Mills Mall, one of the state's biggest tourist attractions, as well as the Lowe's Motor Speedway. The June 2008 unemployment rate, at 5.8%, was below the state's rate of 6.2%, but marginally above the national average of 5.7%. Placing some pressure on the local economy, the county's largest taxpayer and second largest employer, Phillip Morris, has announced the closing of its Cabarrus County plant by fiscal year 2010. The plant currently represents 6.7% of the county's tax base. The county expects the impact of the closing to be manageable due to the multi-year nature of the closing, the future potential use of the land, and many of the current employees being close to retirement. Additionally, the phased-closing of the plant happens to coincide with a state initiative to transfer the burden of Medicaid expenses away from counties, which is expected to largely offset lost revenue from Philip Morris.
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