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MOODY'S ASSIGNS Aa3 RATING TO THE CABARRUS COUNTY DEVELOPMENT CORPORATI... Page 1 of 3 Global Credit Research New Issue tYaodY'a lawato» &arr/!ea 1 FEB 2007 Save as PDF New Issue: Cabarrus (County of) NC MOODY'S ASSIGNS Aa3 RATING TO THE CABARRUS COUNTY DEVELOPMENT CORPORATION'S (NC) $32.99 MILLION CERTIFICATES OF PARTICIPATION (COUNTY OF CABARRUS, NORTH CAROLINA INSTALLMENT FINANCING CONTRACT), SERIES 2007 AFFIRMS Aa2 RATING ON CABARRUS COUNTY'S;139.8 MILLION IN OUTSTANDING GO DEBT Cabarrus (County of) NC County NC Moody's Rating ISSUE RATING Certificates of Participation (County of Cabarrus, North Carolina Installment Financing Contract), Aa3 Series 2007 Sale Amount Expected Sale Date Rating DescHption Opinion $32,900,000 02/15/07 Certificates of Participation NEW YORK, Feb 1, 2007 -- Moody's Investors Service has assigned an Aa3 rating to Cabarrus County's (NC) $32.99 million Certificated of Participation, Series 2007 issued through the Cabarrus County Development Corporation. The Certificates of Participation (COPS) ere secured by annual appropriations from the Cabarrus County and by recourse to the county's law enforcement complex, the construction of which the COPS will finance, and the land on which it sits In the event of non-appropriation. The Aa3 rating is based the legal structure and essential nature of the pledged assets, as well as the long-term credit characteristics of the county. Concurrently Moody's has affirmed the Aa2 rating on Cabarrus County's $139.8 million of outstanding general obligation debt. The rating reflects the county's growing local economy, a moderate level of indebtedness not expected to increase significantly, and a financial position that has been bolstered by new management policies. SATISFACTORY LEGAL STRUCTURE; ESSENTIAL ASSETS PLEDGED AS COLLATERAL The certificates are secured by the county's pledge to annually appropriate lease payments, sufficient to pay debt service, and collateral is provided by a security Interest in the law enforcement complex and the land on which it sits. The county will make payments under the Installment Financing Contract directly to the Trustee five calendar days before debt service is due. Total collateral available to bondholders in the event ofnon- appropriationwill be approximately $35.5 million when the justice completed, creating aloan-to-value ratio of over 100%. Moody's believes the essential nature of the assets pledged mitigates the risk of non appropriation. Further mitigating the'risk of non-appropriation, under terms of the lease, the budget officer is required to include installment payments in each proposed budget for the life of the certificates. The Board of Commissioners may delete the appropriation only through an express resolution. It the county fails to make installment payments, the Trustee can accelerate payments and may institute foreclosure proceedings and apply the proceeds of the sale of project to the balance of payments due under the certificates. There is no debt service reserve fund, NEW BIOTECH CAMPUS BROKE GROUND IN 2006; CHARLOTTE MSA ECONOMY REMAINS ROBUST Cabarrus County remains a growing residential and commercial community that benefits from its proximity to the City of Charlotte (G.O. rated Aaa). Residential growth had been so rapid that the county commission enacted a six month moratorium on new building permits that ended In June 2005, but construction activity remained robust during that period. As a result, the=property tax base increased by $743 million in 2005, http://www.moodys.com/moodys/cust=research/MDCdocs/01 /2006400000425932.as... 2/21 /2007