OREANDA-NEWS. Fitch Ratings has assigned an 'AA+' rating to the following Pitt County, North Carolina (the county) general obligation bonds (GOs):

--\\$19.9 million general obligation community college bonds series 2015.

Bond proceeds will be used to provide funds to pay the costs of community college improvements in the county. The bonds are expected to sell competitively on Aug. 25.

In addition, Fitch affirms the following ratings:

--\\$84.4 million limited obligation bonds (LOBs) at 'AA';
--\\$66.5 million certificates of participation (COPs) at 'AA'.

Fitch has also withdrawn the county's 'AA+' implied ULTGO rating given this issuance of GO bonds.

The Rating Outlook is Stable.

SECURITY

The GO bonds constitute a general obligation of the county, backed by a pledge of the full faith and credit of the county.

Payment on the COPs and LOBs is subject to annual appropriation, and a deed of trust provides security interest in essential government assets.

KEY RATING DRIVERS

SOLID FINANCES: The county's financial condition is sound; healthy fund balances that have increased significantly in recent years provide ample flexibility.

REGIONAL HUB: Pitt County serves as the main economic center for northeastern North Carolina. Wealth indicators are below state and national averages, although they are somewhat skewed by a large student population.

FAVORABLE DEBT PROFILE: With a low overall debt burden, affordable future borrowing plans and modest pension and OPEB liabilities, the county's debt profile is expected to remain stable.

APPROPRIATION LIEN ON ASSETS: The one-notch distinction between the 'AA+' GO rating and the 'AA' rating on the COPs and LOBs reflects the appropriation risk inherent in the installment payments to be made by the county. This risk is somewhat offset by a security interest in essential leased assets, as evidenced by a deed of trust.

RATING SENSITIVITIES

STRONG FINANCIAL MANAGEMENT: Financial flexibility continues to be ample, with healthy fund balance levels as a result of conservative budgeting practices. Although not expected, material weakening of the county's financial flexibility could result in negative rating action.

CREDIT PROFILE

Located 90 miles east of Raleigh (Fitch GO bonds rated 'AAA', Stable Outlook), Pitt County is a rapidly growing retail, commercial, healthcare, and education center for northeastern North Carolina. As one of the fastest growing counties in the state, the population increased by 4.3% between 2010 and 2014. Management attributes population growth to affordable land, new schools and a good transportation system in the southern part of the county.

IMPROVING OPERATING RESULTS

Conservative budgeting and spending cuts allowed the county to realize annual operating surpluses over the past three fiscal years. During fiscal 2014, a defeasance of outstanding hospital bonds resulted in a gross economic gain of approximately \\$7.4 million which was added to fund balance. The unrestricted general fund balance increased to \\$26.6 million or an ample 20% of general fund spending (net of financing activities).

The county's statutorily required reserve, which is primarily to offset accounts receivable, is a source of additional financial flexibility. This reserve totaled \\$8.9 million at fiscal 2014 year-end, or an additional 6.5% of spending. The county has a goal of maintaining an unassigned general fund balance at 18-20% of spending. As of fiscal 2014, the county had met this goal.

The fiscal 2015 expenditure budget was up 2% over the prior year, kept the property tax rate flat and included a \\$2.8 million fund balance appropriation. The budget also included staffing increases for public safety and human services and additional funding for both Pitt County Schools and Pitt Community College. Preliminary estimates suggest fiscal 2015 operating results will be positive.

The adopted fiscal 2016 general fund spending budget is up roughly 4% over fiscal 2015. The budget again holds the tax rate constant and appropriates \\$2.5 million of fund balance. Planned spending again provides additional funding to both Pitt County Schools and Pitt Community College, increased staffing, and also includes a pay increase for county employees.

PROPERTY TAX PROVIDES STABILITY

Property taxes are the county's largest operating revenue source at 60% of the fiscal 2014 total. Following a 3.8% cumulative decline between 2011 and 2013, taxable assessed value (AV) increased 2.9% in fiscal 2014. County management is projecting 2% annual growth going forward, which is consistent with recent housing value trends.

The county's property tax rate is average compared to similar-size neighboring communities at \\$0.68 per \\$100 of AV, and is well below the statutory cap of \\$1.50. As a result of the state's new vehicle registration and tax program and increased collections staffing, the county's total tax collection rate increased to 99% in fiscal 2014 from 97% a year prior.

REGIONAL ECONOMY

The employment base is diversified, with services, healthcare, wholesale/retail trade and education each accounting for at least 15% of total employment. The county's employment base has increased consistently over the past five years; however, the unemployment rate did increase to 6.6% in May of 2015 from 6.7% a year prior, which is above the state and national averages for the month.

Major employers include Vidant Medical Center (6,895 employees), East Carolina University (5,564 employees), Patheon (900 employees) and NACCO (1,000 employees). Several of the county's largest employers continue to expand their operations with additional reported investments.

FAVORABLE DEBT PROFILE; AFFORDABLE LONG-TERM LIABILITIES

Overall debt levels are modest at 1.5% of fiscal 2015 market value and \\$1,023 per capita. Debt service represented a manageable 11.5% of fiscal 2014 total governmental spending. The pace of amortization is average.

The county's five year capital improvement plan totals \\$121.4 million and is mostly debt funded. Proposed borrowings focus primarily on Pitt Community College and Pitt County Schools capital projects. The additional debt is not expected to materially impact the debt profile.

Pension and other post-employment benefits (OPEB) benefits continue to be generally well managed. The county contributes to five retirement plans including the state sponsored Local Government Employees' Retirement System (LGERS). The county's fiscal 2014 total contribution was an affordable \\$7.6 million or 4.8% of governmental spending. For OPEB, the fiscal 2014 annual contribution represented less than 1% of spending. Carrying costs (combined debt, pension and OPEB) for fiscal 2014 were a manageable 15.7% of governmental spending.