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FITCH DOWNGRADES HAMILTON COUNTY, OHIO'S SR.

LIEN
SALES TAX BONDS TO 'A+' & JR. LIEN TO 'A'
Fitch Ratings-New York-17 November 2009: In the course of routine surveillance, Fitch Ratings
has downgraded Hamilton County, Ohio's approximately $20 million outstanding senior lien sales
tax bonds to 'A+' from 'AA'. In addition, Fitch also has downgraded the county's approximately
$552 million outstanding junior lien sales tax bonds to 'A' from 'A+'. The Rating Outlook on all the
bonds is Stable.

The downgrades to 'A+' and 'A' on the senior and junior lien sales tax bonds, respectively, reflect
overall deterioration in the county's fiscal health as indicated by reduced general fund reserves,
declining sales tax revenues, and findings by the Ohio State Auditor that could result in increased
financial burden. In addition, Fitch has significant concerns about a lack of transparency in financial
reporting given several fiscal years for which no audited financial statements are available. The
downgrade is in conformance with Fitch's special tax bond criteria, which limits the rating on the
county's sales tax bonds to that indicated by its general obligation credit quality.

The Stable Outlook reflects management's demonstrated willingness to implement appropriate cost
saving measures to retain a minimum level of flexibility, although the lack of consistently available
audited financial results make assessments on the county's financial position difficult. The county's
economic base is under pressure, but unemployment rates are below state and national figures and
wealth levels are above average.

The county currently levies two 0.5% sales taxes, one of which is pledged to the sales tax bonds for
the construction of two sports stadiums, while the other provides general fund support for the
county. Reflecting the weakened regional economy, sales tax receipts have declined for the past two
fiscal years. Despite budgeting for a 2.4% decrease in collections for fiscal 2009 (FYE Dec. 31), the
county is projecting a $4 million sales tax shortfall in its general fund, or an 8.5% total decline from
fiscal 2008 according to August projections. For fiscal 2010, the county has budgeted another 3.8%
decline from projected actual fiscal 2009 receipts.

Coverage on the senior lien bonds, which were issued under a closed lien, is projected to equal a
very high 63.7 times (x) annual debt service for fiscal 2009. Total coverage for the senior and junior
lien bonds is a satisfactory 1.62x annual debt service based on 2009 pledged revenues but only
1.05x of maximum annual debt service (MADS) due to an escalating debt service schedule that
assumed 3% average annual sales tax revenue growth through maturity in 2032. A sales tax
stabilization fund, required to be funded by Jan. 15 of each year to a level of at least 10% of the
highest year's sales tax receipts, provides some cushion to junior lien bondholders. However, this
fund can be drawn down during the year for subordinate obligations such as property tax rebates,
and in 2009 was reduced to $1.1 million (from $6.6 million) providing only modest additional
protection for the Dec. 1 debt service payment. It is anticipated that this fund will be replenished in
December 2009.

Residual pledged sales tax revenue generally provides funding for property tax rebates, school
district payments, operating expenses for the county's two stadiums, and expenses related to
redevelopment projects in the area. The county is currently projecting a $13 million gap between
available residual revenue and funding needs in these areas, which Fitch expects management to
address along with other spending pressures.

Unaudited fiscal 2008 results show a decrease in the general fund balance to $14.1 million or 5.4%
of spending from $18.8 million or 7.6% of spending in fiscal 2007, well below the county's policy
of maintaining a balance of 15% of spending. In fiscal 2009, management reduced spending by
approximately $41 million including reductions in headcount by over 500 employees in its general
fund. As a result of the reductions, fund balance is anticipated to decline but increase as a
percentage of spending for fiscal 2009 to 6%. The county expects fund balance for fiscal 2010 to
improve slightly due to further reductions in spending as well as milder projected sales tax declines.
Officials cite the ability to increase the sales tax rate for operations by 0.5% as a point of future
financial flexibility, although no increase is currently planned.

Due to ongoing audits by the Ohio Department of Jobs and Family Services of the county's
accounting practices within the County's Department of Jobs and Family Services, the county's
outside auditor decided not to complete audited financial statements for fiscal 2004 through 2006.
The Auditor of State recently released its fiscal 2007 audit, which received an adverse opinion from
her office due to management's failure to implement reported recommendations stemming from the
State Auditor's 2006 Special Audit. However, the State Auditor acknowledged that final
adjustments to fund balances could not be determined until the Ohio Department of Job and Family
Services completed its audit work. While the financial impact to the county stemming from the
audits is still unknown, the County Department of Job and Family Services has maintained higher
fund balances, outside the general fund, to absorb the impact of any potential financial finding for
recovery that cannot be paid or absorbed through another means. The audit findings indicate that
the impact to the general fund will likely be minimal. Neither a final dollar amount for any financial
finding for recovery nor a timeline for completion can be estimated at this time.

Located on the border of Kentucky and Indiana, Hamilton County's economy has a diverse,
service-based economy. As of September 2009, the county's unemployment rate of 8.9% compared
favorably to state and national averages of 9.7% and 9.5%, respectively. Income and wealth levels
are above average with per capita money income equaling 113% of the state in 2007 and median
household income equal to 102% of the state level. The county's overall debt burden is moderate,
equaling 3.1% of market value or $2,073 per capita.

Contact: Dora Lee +1-212-908-0341, New York; or Melanie A.J. Shaker +1-312-368-3143,
Chicago.

Media Relations: Cindy Stoller, New York, Tel: +1 212 908 0526, Email:
cindy.stoller@fitchratings.com.

Additional information is available at 'www.fitchratings.com'.

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