OREANDA-NEWS. Fitch Ratings affirms its 'AA-' rating on the following Boulder County, Colorado's (the county) Clean Energy Options Local Improvement District (the district) bonds:

--\\$635,000 special assessment bonds, series 2009C;
--\\$980,000 special assessment bonds, series 2009D.

In addition, Fitch affirms the 'AA+' implied unlimited tax general obligation (ULTGO) bond rating on Boulder County.

The Rating Outlook is Stable.

SECURITY
The bonds are payable from pledged revenues from special assessments collected from real property of participants in the local improvement district. The bonds are further backed by the county's moral obligation to restore draws on the debt service reserve fund (DSRF), which equals approximately 50% of maximum annual debt service (MADS) payments.

KEY RATING DRIVERS
SATISFACTORY DEBT SERVICE COVERAGE: The 'AA-' rating on the special assessment bonds reflects solid debt service coverage, supported by a levy 1% above the bond interest rate, and the accumulation of excess funds in a dedicated surplus account.

STRONG LEGAL PROVISIONS: Special assessments constitute a lien on parity with property taxes and the county's efficient annual tax lien sale provides added credit strength.

SMALL SIZE OFFSET BY VOLUNTARY PARTICIPATION: Fitch's concern about the district's small size and non-traditional purpose is largely offset by the jurisdictions' voluntary participation in the program.

SOLID CREDIT FUNDAMENTALS: The 'AA+' implied ULTGO rating reflects the county's strong general credit characteristics, evidenced by a history of large financial reserves, conservative budgeting, and effective cost controls. Although floods in 2013 caused the county to incur substantial up-front costs for debris removal and infrastructure repairs, federal reimbursements and state assistance are projected to offset the majority of on-going rebuilding costs.

POSITIVE DEBT PROFILE: The county's debt profile is positive, characterized by a moderate overall debt burden, rapid principal amortization of direct debt, and limited borrowing plans. Carrying costs for debt, pension and other post-employment benefits (OPEB) liabilities are modest.

STRONG ECONOMY: The county's economy is strong and diverse benefitting from above average income levels, below average unemployment and stable employers. Large tax base gains reflect rapidly rising home values and new construction.

RATING SENSITIVITIES
COVERAGE CHANGE: The rating is sensitive to changes in pledged revenues and coverage levels they provide.

ULTGO CAP: The implied ULTGO rating, which provides a cap for the special assessment bond rating, is sensitive to shifts in fundamental credit characteristics including the county's strong financial management practices. The county's history of maintaining solid reserves while addressing operating and capital needs indicates continued rating stability.

CREDIT PROFILE
Boulder County has attracted a wealthy population base. The diverse area economy is supported by its proximity to Denver, located 30 miles to the southeast, and the presence of the University of Colorado with 30,000 students. Economic stability is evidenced by unemployment rates which are historically lower than the state and national averages; income levels at 130% of national averages; and leading private technology and research employers such as Ball Aerospace, Sun Microsystems and the IBM Corporation. Additionally, Google will soon break ground on a new corporate campus for up to 1,500 employees.

The county's assessed valuation (AV) trends outperformed most Colorado municipalities during the last recession, declining by a cumulative modest 4% in 2011-2012. AV turned sluggish through 2015 but surged by 19% in 2016 due mostly to reassessment gains. The next reassessment cycle (in 2018) is also likely to show strong gains as the median sales price of homes within the county rose by a high 17% to \\$405,000 for the 12 months ending July 2015 according to Zillow. Market value per capita remains well above average at \\$192,000. The tax base is diverse and the top 10 taxpayers constitute a modest 5% lead by Xcel Energy at 1.6%.

SPECIAL ASSESSMENT FOR ENERGY IMPROVEMENTS

Developed from ongoing efforts by county officials to accomplish sustainability/renewable energy goals and more broadly provide such measures to the public, the Climate Smart Loan Program (the program) was strongly approved by voters countywide in November 2008 to finance solar, wind, and other renewable energy and energy-efficient improvements.

Property owners voluntarily opt into the program and agree to pay special assessments that are collected along with property taxes and carry a parity lien. An estimated 700 residential properties have opted in so far, including about 220 homeowners in the 2009 bond offerings. The county reports that over 40% of participants have paid their loans in full, leading the county to pursue optional redemption for a portion of both series of bonds. Approximately \\$12.3 million of the \\$40 million authorization has been issued in a total of seven installments to date, only \\$1.5 million of which is rated by Fitch in two separately-secured series.

Individual loans are capped at no more than 20% of the property's statutory actual value. The assessments benefit from a strong collection system and are levied at 1% above the bond interest rate. Coverage by 2014 revenues is ample, providing MADS coverage of 330% for the series 2009D bonds. For the series 2009C bonds, coverage of MADS (which occurs on the final maturity in 2024) is below 1 times (x) due to a balloon payment structure and the planned use of the debt service reserve. MADS coverage rises to 100% with the addition of the surplus and deficiency account. For both series, coverage remains strong even under stress scenarios assuming significant assessment declines and no revenues from tax lien sales.

ADEQUATE SECURITY PROVISIONS

The bonds are special, limited obligations of the county, payable solely from assessments that are levied and collected by the county against properties of those who participate in the program. The assessments represent a perpetual, first lien on the property equal with the lien for general taxes and cannot be separated from property taxes at a tax sale. The foreclosure process on delinquent properties is prompt and considered by Fitch to be a positive credit factor. If not paid by June 30, all assessments become fully due and payable, moving towards a tax sale on Nov. 1. The county's rate of collection on tax sales is very strong at close to 100%.

In the event assessment payments are insufficient to cover debt service, the flow of funds designates initial use of a pledged surplus and deficiency account, each series having a separate sub-account. Due to surplus revenues attributed to early repayments, the accounts' balances have increased to \\$244,000 for series 2009C and \\$403,000 for series 2009D, equal to about 60% MADS and 250% MADS, respectively. Coverage is increased further when accounting for the surplus generated by setting the rate an additional 1% higher than the interest rate on the bonds, as laid out in the indenture.

While not factored into the rating, the county does apply its moral obligation to replenish draws on the DSRF. In the event of a drawdown, the board is required to meet within 10 days and decide to budget or appropriate for replenishment. Fitch does not give any credit enhancement to the moral obligation because the DSRF is sized at roughly 50% of MADS and does not fully cover each semi-annual debt service payments.

Once 3/4 of the bonds have been repaid, the county has pledged to pay the remaining 1/4 and will reimburse itself by collecting the remaining assessments.

FLOOD DAMAGE AND ONGOING RECOVERY

Historic levels of precipitation along the Front Range during the week of Sept. 16, 2013 led to substantial flooding in Boulder County. The county reports none of the homes of the Climate Smart Loan program participants are in the areas most affected by the floods, Jamestown and Lyons. The county estimates flood related repairs to roads, bridges, parks, and county buildings will total \\$220 million through 2018, 35% of which has been spent so far. The county was declared a major disaster area and is receiving reimbursement from FEMA for 75% of costs for rescue efforts, debris removal, and repairs to roads, bridges, and other infrastructure. Reimbursement for 12.5% of flood recovery costs are also being received in the form of state grants. Voters also approved a five-year 0.0185% flood recovery sales and use tax to fund recovery efforts. The tax, which became effective Jan. 1, 2015, is projected to generate \\$9 million in 2015. This sales tax increment will fully support debt service payments on \\$40 million of COPs issued in 2015 to kick start the county's flood repair efforts.

SOLID FINANCIAL PROFILE WEATHERS FLOOD RECOVERY COSTS

Strong financial planning and conservative management practices have contributed to the county's sound financial operations. The county regularly reports operating surpluses and very high reserves. As expected, a portion of county reserves were tapped in 2013 for flood-related recovery costs. A \\$10.6 million (7.2% of spending) use of fund balance in 2013 reduced the unrestricted fund balance to a still high 35.6% of spending. A larger \\$28 million (15% of spending) draw down followed in 2014 in order to fund a similarly-sized transfer to the road and bridge fund for flood repairs. The resulting unrestricted fund balance declined to \\$23 million or 12.5% of spending. Adjusting for almost \\$5 million in restricted state-required emergency reserves increases the financial cushion to 15% of spending in 2014.

The adopted 2015 budget is balanced and includes \\$19 million in reimbursements and \\$11 million in flood recovery expenditures. Management projects that positive year to date variances in revenues and expenditures will add \\$15 million (9.4% of spending) to the county's unrestricted fund balance.

The county is subject to maximum mill levy requirements, however, voter support for county services is strong as evidenced by recent mill levy and sales and use tax increases for health and human services, open space improvements, and flood recovery costs. Fitch believes management will continue its proactive financial planning practices and budgetary oversight to maintain its sound financial position.

AFFORDABLE DEBT AND PENSION BURDEN

The county's overall debt ratios are moderate at \\$3,160 per capita or 1.6% of market value. The majority of overlapping debt belongs to Boulder Valley School District No. RE-2 (GO bonds rated 'AA+' by Fitch). Future debt financing plans are limited, and debt amortization of the special assessment bonds is rapid with 100% retired in nine years. The aggregate pay-out rate for the county's special assessment bonds, sales tax bonds, and COPs is also rapid at 78% in 10 years.

The county provides pension and OPEB benefits to its employees through its participation in the Public Employee Retirement Association of Colorado (PERA). As of Dec. 31, 2014, the local government division's funded ratio was a satisfactory 78.7%, or a Fitch- estimated 74.6% based on a 7% rate of return. The county's pension contributions will rise modestly through 2018 as a result of reform legislation enacted in 2012. In 2014, the county's combined contributions to PERA's pension and OPEB funds totaled \\$15.4 million or a manageable 4.8% of governmental spending. Total carrying costs for debt service, pension, and OPEB are modest at 9.1% of governmental fund spending in fiscal 2014.