OREANDA-NEWS. Fitch Ratings assigns an 'AAA' rating to the following Maryland-National Capital Parks and Planning Commission (MNCPPC) bonds:

--$12 million Montgomery County general obligation (GO) park acquisition and development project bonds, series MC-2016A,
--$6.055 million Montgomery County GO Park acquisition and development project refunding bonds, series MC-2016B,
--$1.005 million Montgomery County GO advance land acquisition refunding and development project bonds, series MC-2016C.

Proceeds of the MC-2016A bonds will be used to fund park acquisition and development projects in Montgomery County (the county), Maryland, and the MC-2016B and MC-2016C bonds will refund various series of bonds. The bonds are scheduled for sale on April 14.

In addition, Fitch affirms the following ratings:

--$38.65 million MNCPPC Montgomery County Park acquisition and development GO Bonds, various series.

The Rating Outlook is Stable.

SECURITY

The bonds are general obligations of the MNCPCC and the county, secured by a mandatory tax levy on the county's portion of the metropolitan district as well as the county's unlimited taxing authority on all property within its borders.

KEY RATING DRIVERS

CREDIT STRENGTHS OF MNCPPC AND MONTGOMERY COUNTY: The 'AAA' rating reflects the GO pledge and creditworthiness of both the MNCPCC and the county (GOs rated 'AAA').

MNCPCC CREDIT PROFILE: The MNCPCC's 'AAA' GO credit profile reflects sustained solid financial performance and policies, low debt and the support of the county in raising revenues if needed and approving the budget. MNCPCC's limited programmatic mission is centered on the acquisition, operation, and maintenance of a sizeable and highly regarded regional parks system.

SIGNIFICANT DEBT SERVICE LEVY FLEXIBIITY: Proceeds from a state-mandated limited ad valorem tax on taxable property within the metropolitan district are pledged to the repayment of bond principal and interest. Maximum annual debt service (MADS) on the bonds consumes less than 10% of 2015 mandatory tax proceeds. The MNCPCC utilizes the excess levy for operations.

WELL-MANAGED DEBT: Overall debt and pension liability levels are low and additional debt issuance by MNCPCC would have a negligible impact on the overall burden.

DIVERSE AND EXPANDING ECONOMY: The county benefits from its central location in the national capital region and its well-developed transportation infrastructure. It attracts a strong economic base centered upon vital government operations, healthcare and higher education. Unemployment rates consistently perform better than the regional, state and national averages and local income indicators are above average.

SOUND FINANCIAL PERFORMANCE: Maintenance of financial flexibility is a key rating driver for the MNCPCC as well as the county. Fitch anticipates a decline in MNCPCC reserve levels over time based on the parks and planning initiatives but that reserves will remain adequate.

RATING SENSITIVITIES

The rating is sensitive to shifts in fundamental credit characteristics of the MNCPP and the county. Given the double-barreled pledge, the rating on the MNCPCC bonds would reflect the higher of the two ratings should they diverge.

CREDIT PROFILE

The Maryland-National Capital Park and Planning Commission is a bi-county agency empowered by the state of Maryland in 1927 to acquire, develop, maintain and administer a regional system of parks within Montgomery and Prince George's Counties, and to provide land use planning for the physical development of each county. In addition, the Commission has the responsibility for the public recreation program in Prince George's County.

The MNCPCC also prepares and periodically reviews a general plan for the entire district including master plans for transportation, parks and open spaces and public facilities and also studies and makes recommendations with respect to all requested zoning applications. The MNCPCC employs over 2,000 year-round employees and over 4,000 seasonal workers. Two regional offices are maintained, one in each county and the MNCPCC holds regular monthly meetings.

Each county appoints a five-member planning board member to the MNCPCC to facilitate, review and administer matters affecting their respective counties. The MNCPCC's major source of funding is property taxes levied on an individual county basis. Separate accounts for each county are maintained within the MNCPCC's general fund for transparency purposes. The MNCPCC issues debt separately for each county, not for the MNCPCC as a whole.

ECONOMIC PERFORMANCE REMAINS VERY STRONG

Montgomery County continues to exhibit a very impressive economic profile. The county has gained employment each year since 2009. Consequently, the January 2016 unemployment rate was low at 3.6%, well below those of the U.S. (5.2%) and Maryland (4.9%).

The county remains one of the wealthiest in the country, with per capita money income and median household income at 133%-184% of the national benchmark. Favorable wealth characteristics are fueled by the highly educated workforce (almost 57% of the adult population holds a bachelor's degree or higher compared with 28% for the nation) and the significant presence of the U.S. government and contractors in the information and intelligence, biotechnology and high-tech manufacturing industries.

According to county-provided data, federal government employment is led by the U.S. Department of Health and Human Services (28,500 employees) and U.S. Department of Defense (DOD) (12,000 employees). Concerns with respect to budget cuts at the DOD are somewhat tempered by the nature of defense operations within the county, which center on the Walter Reed National Military Medical Center and the U.S. Army Research Laboratory. A new $300 million federal intelligence campus was completed in October 2015 serving as home to 3,000 employees of the Office of the Director of National Intelligence.

FINANCIAL RESERVES EXPECTED TO REMAIN SATISFACTORY

MNCPPC's financial position remains strong. At year-end fiscal 2015 the unrestricted balance totaled $20.6 million or a healthy 17% of general fund operations (administration and park funds).

For fiscal 2016, year-to-date projected year-end results show essentially break-even results. The unrestricted balance is expected to remain ample at approximately $20.7 million or a healthy 17% of budgeted general fund spending.

The MNCPCC's multi-year financial forecast shows use of all but $5.5 million of its reserves (3.6% of expenditures). The drawdown is forecast primarily for operating purposes. The remaining reserve would be in line with management's 3% fund balance policy but well below historical levels. Fitch expects reserves to remain adequate based on historical trends and conservative budgeting practices.

SIGNIFICANT PLEDGED REVENUES

State law requires the county to assess a levy of at least $0.036 per $100 of assessed value (AV) on all real property and at least $0.09 per $100 AV of all personal property located within the metropolitan district. The proceeds of this tax are pledged to payment of debt service on all MNCPCC bonds issued for the county's behalf, with any amount not needed for debt service available to the MNCPCC for its authorized purposes, including operations. The county has no claim to revenues generated by this tax. MADS on the bonds consumes a modest 9.1% of the 2016 mandatory tax proceeds. Given the modest amount of debt service, proceeds from the levy are mostly used for operations.

MANAGEABLE DEBT AND CAPITAL NEEDS

MNCPCC debt levels for Montgomery County are expected to remain low given modest and flexible plans for additional debt. Debt service costs accounts for a modest 3.5% of governmental spending for Montgomery County. The MNCPCC evaluates its capital needs with input from the county, the state, and local residents. The six-year fiscal 2015-2020 capital improvement plan (CIP) related to Montgomery County totals $178.2 million with development projects accounting for slightly over 78% of all needs and acquisition projects making up the remainder. Amortization of outstanding debt is in the average range.

MNCPCC pension and other post-employment benefits (OPEB) are well-managed and are reported on a joint basis (Montgomery and Prince George's counties). The MNCPCC's pension plan reported an 93.5% actuarially funded ratio based on a 7.25% investment rate of return according to the July 2015 valuation report. Fitch estimates the funded ratio at an adequate 91% when adjusted to reflect a 7% investment rate of return. During fiscal 2015, Montgomery County's pension costs totaled approximately $12 million or 8.2% of spending.

The MNCPCC fully funds its annual OPEB ARC pay-go obligation. As of the July 2015 valuation report the program was 16.3% funded and the unfunded actuarially accrued liability was $229 million or less than 1% of market value. During fiscal 2015, Montgomery County's OPEB costs totaled approximately $7.8 million or 5.4% of spending. Total carrying costs for debt service, pensions, and OPEB were 17% of spending.