OREANDA-NEWS. September 29, 2015.  Fitch Ratings assigns an 'A+' rating on the following Citrus County, Florida's (the county) bonds:

--\\$10.5 million non-ad valorem revenue bonds series 2015.

In addition, Fitch affirms the 'A+' rating on \\$21 million of capital improvement revenue and refunding bonds series 2010A and series 2010B (Build America Bonds), and 'AA-' implied unlimited tax general obligation (ULTGO) rating on the county.

The Rating Outlook is Stable.

SECURITY

The series 2015 and the series 2010 A&B bonds are backed by a covenant to budget and appropriate (CB&A) legally available non-ad valorem (NAV) revenues, by amendment if necessary, in an amount sufficient to pay debt service on the bonds. The availability of NAV revenues to pay debt service is subject to the funding of essential government services and obligations with a specific lien on NAV revenues. The issuer's NAV covenant is cumulative and continues until the bonds have been fully paid.

KEY RATING DRIVERS

FINANCIAL STRENGTHENING: After consecutive years of reserve draws resulting from tax base erosion and litigation by the largest taxpayer, the county managed spending and raised the tax rate to effectively regain financial health. High taxpayer concentration poses unique financial vulnerability and the county's effective management was key in restoring financial reserves.

BELOW-AVERAGE ECONOMIC PROFILE: The county economy is limited and highly concentrated with Duke Energy its top taxpayer at nearly 20% of taxable assessed value (TAV). County wealth and income indicators are below average and unemployment remains above state and national levels.

LOW DEBT BURDEN: Debt levels are low and not expected to change materially given the county's limited issuance plans and above average rate of outstanding principal amortization. Carrying costs, including debt service, pension and other post-employment benefit expenses (OPEB) are low.

BROAD AND DIVERSE NAV REVENUE BASE: NAV revenues are broad and diverse and are more than adequate for use toward the bonds' maximum annual debt service (MADS) even after accounting for county debt with a prior claim on NAV revenues.

COVENANT DEBT NOTCHING: A one-notch distinction from the implied ULTGO rating reflects the absence of a pledge of specific revenue and the inability to compel the county to raise NAV revenue sufficient to pay debt service.

RATING SENSITIVITIES

IMPROVING PROSPECTS FOR ECONOMIC DIVERSITY: Two large road projects enhance the prospects for economic diversity, further bolstered by the county's highly rated public schools. Diversification of the county's economic base would be a credit positive.

CONTINUED STRUCTURAL BALANCE: The stable outlook reflects Fitch's expectation of maintenance of adequate reserves.

CREDIT PROFILE

Citrus County is located in the west-central region of Florida, midway between Tampa and the Florida panhandle. The county's population has been generally stable in recent years and was 139,377 in 2014. A significant number of residents are of retirement age, as residents who are 65 years or older account for about 35% of the total population.

NAV REVENUES PROVIDE SOUND BASE FOR DEBT REPAYMENT

Covenant revenues are broad and diverse. The largest components are fuel taxes, the local government half-cent sales tax, state revenue sharing, and charges for services. Fiscal 2014 revenues totaled about \\$33 million, increasing 7.6% from fiscal 2013. Certain NAV revenues are pledged first to other county debt issuance. MADS for all debt payable from NAV revenues totals \\$8.7 million, which NAV revenues cover by a strong 3.8x. The county's practice is to use gas tax revenues to fund the series 2020A&B bonds, which are restricted to capital transportation uses. The current offering funds road improvements and is also expected to be funded from gas tax revenues.

FINANCIAL STRENGTH RESTORED

After five years of reserve draws through the economic downturn and a tax dispute with Duke, financial health is strengthening as the county recorded sizable surpluses in fiscal 2014 and fiscal 2015 (projected). With the tax dispute now settled, fiscal 2016 TAV increased and the county has been able to moderate the tax rate. The impact of the Duke settlement was significant but the county appropriately responded to manage the TAV loss, regain structural balance and restore reserves. The March 2014 property assessment settlement with Duke Energy resulted in a \\$1.9 billion decline in Duke's assessment. Through a combination of spending controls, tax increases and some reserve use, the county weathered the sizable loss of taxable values well.

After filing a lawsuit challenging its appraisal Duke Energy underpaid its 2013 and 2014 tax bills. The county enacted spending reductions related to vehicle purchases and capital projects, freezing positions, and transfers from available balances outside the general fund. The 2013 fiscal year closed with a \\$5.9 million operating deficit, and a still adequate unrestricted fund balance of 14.4% of spending, well within the county's policy guidelines. The fiscal 2014 balanced budget included a contingency reserve appropriation to offset \\$18 million of budgeted disputed tax revenue. The county raised the county-wide tax rate millage 31% to 7.94 mills from 5.98 mills to help fund the tax dispute reserve. The budget was otherwise operationally balanced. Actual results for the year were a sizable \\$9.2 million operating surplus (11.2% of spending), restoring the unrestricted general fund balance to a healthy 24.9% of spending. Total general fund ad valorem current and delinquent revenues increased \\$16 million in fiscal 2014, including a \\$3.9 million payment from Duke as part of the settlement agreement. In addition to the settlement payment, conservative budgeting and spending controls contributed to the operating surplus.

In fiscal 2015 the millage rate was reduced moderately but the budget was balanced. Preliminary figures indicate favorable operations with an operating surplus of over \\$2.7 million, and a stable unassigned balance. The fiscal 2016 budget increases spending 3.1% over the prior year budget. The county again adopted a moderate decline in the millage which was enabled by tax base growth. The tax rate is now 8.4655 mills, above average among counties in the state but within the statutory 10 mill cap. The budget includes reserve use of \\$5.7 million, although given the county's conservative budget practices, balanced operations are likely.

LIMITED LOCAL ECONOMY

Power generation is a long dominant county industry with Duke Energy the county's largest taxpayer accounting for almost 20% of the fiscal 2014 TAV. Duke maintains 4 coal fired plants with a 2,276MW output and a nuclear plant that closed in 2013 on a 4,700 acre site. Construction of a new \\$1 billion 1,640 megawatt natural gas power plant is planned, with construction to begin in 2016 and completion by 2018, which could create over 500 temporary construction jobs.

Healthcare is also an important economic sector, though to a lesser degree. Citrus Memorial Hospital is the county's largest private employer, with 1,400 employees and Seven Rivers Hospital has 525 employees. The county's June 2015 unemployment of 7.7% is down from the 8.5% recorded a year ago, but rate remains above comparable state (5.6%) and national (5.5%) rates. County wealth and income indicators are below state and national averages, reflecting the large retiree population.

TAV is estimated to increase 3.4% in fiscal 2016 after a 36% peak to trough decline from fiscal2008-2015. The tax base remains sizable with full value per capita a favorable \\$102 thousand. Two major road projects are likely to propel future TAV growth. In 2016 the state is scheduled to begin extension of the Suncoast Parkway which will enable county commuters to reach Tampa in under an hour. The county's schools are among the top schools in the state, which is a draw for families. Proceeds of the current offering will be used to widen route 491 through the center of the county, easing access to the Suncoast Parkway.

LOW DEBT LEVELS

Debt levels are low at \\$794 per capita and 0.78% market value (MV) and are likely to remain modest given the absence of near term tax supported borrowing plans. Fiscal 2014 debt service as a percentage of governmental expenditures was low at 5.8%. Amortization of outstanding principal is above average, with approximately 61% maturing in 10 years.

The county provides pension benefits through the state-administered Florida Retirement System (FRS) and funds 100% of its required contribution. Pension costs were a low 4.2% of total governmental spending in fiscal 2014. The FRS funded ratio as of June 30, 2014 was 86.6% or 80.8% under Fitch's more conservative 7% discount rate assumptions. The county offers only an implicit subsidy for other post-employment benefits (OPEB) and funds the liability on a pay-as-you-go basis. The fiscal 2014 OPEB contribution was 0.5% of governmental spending. Total debt service, required pension contribution, and OPEB payment requirements were modest, at 10.4% of governmental spending.