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MOODY'S ASSIGNS Aa3 RATING TO THE CABARRUS COUNTY DEVELOPMENT CORPORATI... Page 2 of 3 bringing the 2006 full valuation of the county to a substantial $14.7 billion. The county is expected to benefit from a large scale redevelopment project in the City of Kannapolis (G.O. rated A3) under which property formerly occupied by a bankrupt textile firm will be developed into a new $1 billion bio-technology research center called the North Carolina Research Campus. Both private corporations and large institutions such as Duke University (rated Aat) and UNC-Chapel Hill (rated Aat) plan to open research facilities within the county. Philip Morris (Altria Group, rated Baal on Watchlist for possible upgrade) remains the largest tax payer in the county, and its manufacturing facility will be upgraded with $200 million of new improvements and equipment in the near-term. Unemployment levels, which spiked up to over 10%following the closing of the textile plans, have improved substantially, and the September 2006 level of 4% was below both state and national averages. SCHOOL EXPECTED TO NEEDS DRIVE MODERATE DEBT BURDEN HIGHER Moody's believes the county's debt position will remain moderate despite needs for school building driven by the population growth. Following the current issue, the county's debt burden. of 1.8%of full valuation will be_, __ slightly below Moody's median for nationally rated counties of 22%. Officials estimate that the school system will require approximately $170 million in new facilities between 2009 and 2011, most of which will be funded from new debt issuance. Payout is below average, with 54.4% of current debt retired within ten years, but matches the useful life of the financed school assets. The county is not parry to any interest rate swap agreements. FINANCIAL POSITION STRENGTHENED BY PROPERTY TAX INCREASE AND NEW POLICIES IN FISCAL 2006 Moody's believes the county's finances have improved to a healthy position, following the implementation of prudent fiscal policies put in place in 2005. After two years of General Fund operating surpluses the total General Fund balance equaled $47.9 million (29.5% of General Fund revenues) at [he end of 2006. Key factors driving the surpluses have been better than budgeted property taxes, strong growth in assessed value over the past several years, solid sales tax growth and general under-spending of appropriations. The return to surplus operations, following four years of weakened financial performance, reflects the county's implementation of new financial policies that limit operating expenditures to the amount of recurring revenue every year, thus ensuring structural balance. In addition, the county has formalized its reserve policy, setting a 15% General Fund balance floor, with excess monies being transferred to the Capital reserve Fund to be used for county capital needs, particularly pay-as-you go financing. Moving forward, Moody's expects that the county will maintain its strengthened financial position given the institutionalization of these practices. KEY STATISTICS: 2006 Population (estimate): 158,758 2006 Full Valuation: $14.7 billion Full value per capita: $92,832 Overall debt burden: 2.2% FY06 General Fund balance: $47.9 million (29.5% of General Fund revenues) Unemployment, County (Spetember 2006): 4% 1999 Median Family Income as a % of state: 115.9% 1999 Per Capita Income as a %of state: 104.0% Post-sale parity debt outstanding: $139.8 million Analysts Elizabeth Bergman Analyst Public Finance Group Moody's Investors Service Zeynep S. Altinordu http: / /www. moodys. com /moodys/cust/research /MDCdocs/ 01 /2006400000425932. as... 2 / 21 / 2007