Bergen County Bond Rating

MOODY'S ASSIGNS Aaa RATING TO $50 MILLION BERGEN COUNTY GENERAL OBLIGATION BONDS

Aaa RATING AFFECTS $392 MILLION BERGEN COUNTY G.O. AND GUARANTEED BONDS, INCLUDING THE CURRENT ISSUE

Bergen (County of) NJ
County
New Jersey

Moody's Rating

Issue Rating

General Improvement Bonds of 2004 Aaa
Sale Amount $26,511,000
Expected Sale Date 09/29/04
Rating Description General Obligation Unlimited Tax

Special Services/Vocational School Bonds of 2004 Aaa
Sale Amount $12,000,000
Expected Sale Date 09/29/04
Rating Description General Obligation Unlimited Tax

County College Bonds of 2004 Aaa
Sale Amount $5,744,500
Expected Sale Date 09/29/04
Rating Description General Obligation Unlimited Tax

NEW YORK, September 22, 2004 -- Moody's Investors Service has assigned a Aaa rating to Bergen County, New Jersey's $50 million General Obligation Bonds of 2004 consisting of $26.5 million General Improvement Bonds of 2004, $12 million Special Services/Vocational School Bonds of 2004 (additionally secured by the state's School Bond Reserve Act, Chapter 72), and $11.5 million County College Bonds of 2004 (one-half of which benefit from the county College Bond Act, Chapter 12). At this time, we have also affirmed the Aaa rating on the county's $392 million general obligation unlimited tax bonds and county guaranteed bonds, including the current issue. This prime Aaa rating reflects the county's significant taxable resources, sound financial position with strong management, and below average debt burden with rapid payout.

SUBSTANTIAL TAX BASE BENEFITS FROM A SIGNIFICANT RETAIL AND RESIDENTIAL COMPONENT

Moody's expects the county's economy to remain vibrant given its size, diversity and favorable location just across the Hudson River from New York City (rated A2/stable outlook). The county's substantial tax base of $122 billion and equalized value per capita of approximately $137,000 are among the highest in the state. The mature tax base is characterized by prime residential, retail and commercial development. Equalized valuations, on which county taxes are assessed, have risen by a healthy 8.9 % annually over the past five years compared to annual increases averaging 1.7% for the prior five-year period. Officials credit the recent gains to redevelopment of existing residential units and new residential construction in northeast Bergen County, both driven by the economy's low interest rates. Unemployment (4.7% in July 2004) remains below the statewide median, in part, to the county's close proximity to New York City. Wealth levels, above the state's already high norms according to the 2000 census, are expected to remain high.

FUND BALANCE BOLSTERED BY FULLY RESERVED RECEIVABLES

Moody's believes the county's finances will remain sound, due to conservative budgeting and the end of a practice of using reserve funds to avoid property tax rate increases. Fiscal 2003 reflects an operating surplus of $4.4 million, raising the Current Fund balance to approximately $23.7 million, or 6.3% of revenues. Offsetting the somewhat narrow Current Fund balance recorded on the county's balance sheet is an approximately $33 million receivable associated with the Bergen Regional Medical Center (BRMC), a part of which, over time, may be available to augment the county's Current Fund reserves. This receivable consists of $26 million collected by the BRMC manager for services provided by the county prior to 1998 when the license was transferred to The Bergen County Improvement Authority and the manager was hired, as well as a $6 million working capital loan proffered by the county to assist with the manager's start-up costs. Repayment of these moneys is scheduled to begin in 2007. The 2002 deferred charge (with offsetting liability) associated with the county's responsibility to pay the BRMC for prisoner care in 2001 will be replaced with a $1 million deferred charge for each of five years beginning in fiscal 2004 as a result of settling four lawsuits for $5 million. Moody's believes that these reserves provide adequate financial flexibility for this well-managed, wealthy county.

The county has decreased its tax rate annually from 1994 to 2004, making its 2004 property tax rate of $1.98 per $1,000 of assessed value one of the lowest in the state. The county continues to appropriate most of the fund balance for current year operations. However, it has shown itself able to replenish roughly $15 to $23 million of reserves annually, indicative of its strong financial controls and conservative budgeting practices. The fiscal 2004 budget calls for an increased use of Current Fund reserves ($22.7 million out of $23.7 million). Projections to date indicate that all reserves will be replenished, resulting in a Current Fund balance at the end of fiscal 2004 of approximately $23.7 million. Replenishment of the appropriated fund balance is expected to come from nonbudgeted revenues, such as Central Municipal Court fees, and miscellaneous revenues anticipated in excess of budget such as county clerk fees, lapsed appropriations, and contract cancellations.

Incremental revenues for 2004 of over $21 million, including a property tax increase of $17.2 million are expected to cover the $9.3 million of new expenses in 2004 associated with labor costs, health and business insurance, pension payments, and debt service as well as replace 2003 one-time and nonrecurring revenues, bringing the county much closer to structural balance--an important factor supporting our highest-grade rating.

LOW LEVEL OF RAPIDLY RETIRING DEBT WITH MANAGEABLE BORROWING PLANS

The county's overall debt burden remains low at 1.0%, and direct debt is minimal at just 0.3%. Moody's expects the county's debt to remain easily affordable given a very rapid payout schedule (88% in 10 years) and manageable borrowing plans. Future borrowing plans are expected to be in line with historical annual borrowing.

KEY COUNTY STATISTICS

2000 population: 884,118 (+7.1% since 1990)

1999 per capita income: $33,638 (125% of the state)

1999 median family income: $78,079 (119% of the state)

2000 median housing value: $250,300 (147% of the state)

2004 equalized valuation: $121.6 billion

2004 equalized valuation per capita: $137,540

7/04 unemployment: 4.7% (86% of the state)

Debt burden: 1.0%

Fiscal 2003 Current fund balance: $23.7 million (6.3% of Current fund
revenues)

Post-sale parity debt outstanding: $392 million

ANALYSTS:
Edith Behr, Analyst, Public Finance Group, Moody's Investors Service Yaffa Rattner, Backup Analyst, Public Finance Group, Moody's Investors Service

CONTACTS:
Journalists: (212) 553-0376
Research Clients: (212) 553-1653

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