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FitchRatings Public Finance KNOW YOUR RISK Tax Supported Cabarrus County, North Carolina New Issue Ratings ^ Outlook New Issue The `AA-' long-term rating on the certificates of participation (COPS) Certificates of Participation, reflects the county's solid credit characteristics, the essentiality of the Series 2007 ..................................... AA- mortgaged property, and sound legal provisions. The long-term `AA' general obligation rating recognizes Cabarrus County's strong fmancial Outstanding Debt expanding economy. The county has flexibility as well as its broad and General Obligation Bonds .................. AA ° recovered economically from the 8/° unemployment mtes and deficit in Certificates of Participation, Series 2001, 2002, 2003 .................. AA- fiscal 2004, precipitated by the July 2003 closing of its largest employer. Installment Payment Revenue Bonds, Since 2005, unemployment has been below the state and national average, Series 1999 ...................................... AA- while the general fund's unreserved balances have exceeded 22.6%. Nevertheless, as the county continues its rapid expansion i[ will face the Rating Outlook ................................... Stable challenge of addressing its capital needs without increasing an aUeady above-average debt service burden. Analysts Barbara Ruth Rosenberg ^ Rating Considerations +1 212 908-0731 barbara.rosenberg@fitchratings.com The COPS are secured by installment payments made by the county to the trustee, as assignee of the Cabarrus County Development Kelly McGary Corporation (CCDC), a nonprofit corporation created to assist the county +1 813 224-0492 in financing public projects. The payments, subject to appropriation, kelly.mcgary@fitchratings.com equal debt service on the COPS. Certificate proceeds will fund the construction of a sheriff s administration building, which is expected to Issuer Contact be completed in two years. Additional security is provided under a deed Pam S. Dubois of trust that grants the corporation a benefit of first lien in the leasehold Deputy County Manager for Administration interest in the sheriff's administration building and [he land on which it +1 704 920-2107 is located. The county plans to issue $50 million-$60 million in additional COPS in 2007 to finance a 530-bed jail although [he New Issue Details transaction may be delayed by public opposition and a lawsuit; [he Approximately $32,830,000 Certificates of county was successful in a lower court and believes it will win the Participation, Series 2007, are scheduled to sell appeal currently pending. on Feb. 7 Ovough negotiation led by L)BS Securities. The bonds will mature serially Located 18 miles northeast of Charlotte in the state's rapidly Bowing Feb. 1, 2008-2027. piedmont section, the county has seen a strong population growth of Security: The certificates are secured by installment payments made by the county to 14.63% since the 2000 census, above the Charlotte metropolitan statistical the trustee, as assignee of the Cabarrus County area's 13.54% increase and nearly double North Carolina's 7.49%. Its Development Corporation. The county will proximity to Charlotte has helped the county diversify its economy to execute a deed of trust that grants a lien on include manufacturing, retail, and wazehousing/distribution, ashift from the premises. its traditional emphasis on famung and textiles. Additionally, the county Purpose: Certificate proceeds will be used to contains the 1.4 million square-foot Concord Mills Mall, one of the state's fund the construction of a sheriffs biggest tourist attractions, as well as [he Lowe's Motor Speedway. administration building. Although Cabarrus' economy suffered a downturn m 2003 with the closing of its largest employer, Pillowtex, the November 2006 4.2% unemployment rate is below state and national average levels. Pillowtex's former site is being privately developed into a $1 billion research campus, which will house biotechnology and nutrition research labs for the University of North Carolina at Chapel Hill, Duke University, and Rowan- Cabarms Community College. The redeveloped site will also include new retail and commercial space and 700 residential units. January 30, 2007 www. fiichratings. corn ~_ I