DALLAS - Standard & Poor's has moved Harris County's outstanding general obligation bonds and its Series 2008A tax and subordinate-lien revenue refunding bonds to AAA from AA-plus due to the Houston area's strong economic trends and the county's firm financial management.

The upgrade also affects GOs issued by the Harris County Flood Control District.

The county's GOs are rated Aa1 by Moody's Investors Service. Fitch Ratings does not have an unenhanced rating for the county's debt.

Harris County includes Houston and all or portions of more than 400 active utility districts, more than 20 school districts, and more than 25 cities and towns, along with several other special taxing districts. The county has a population of some 3.6 million.

Standard & Poor's raised its unenhanced rating on Houston's GOs to AA from AA-minus in December, noting that officials have "effectively administered the city's financial operations and essentially dealt with some significant long-term liabilities." Moody's rates the city's GOs at Aa3 and Fitch provides an unenhanced rating of AA-minus for Houston's outstanding GOs.

The total tax base in Harris County has almost doubled in the last 10 years, going to $253 billion in fiscal 2008 from $130 billion in fiscal 1999. The property tax base is up 37% from 2004, Standard & Poor's analyst James Breeding said in the upgrade report, and continues to expand.

County officials expect the annual growth in the property tax base to slow down somewhat to 3%. However, the actual growth rate has averaged close to 7.4% in recent years.

Harris County has $2.36 billion of outstanding tax-supported bonds, of which $677 million are fully supported by county toll-road receipts. The county levies a 3.2% tax rate for debt service.

The county has $961 million of authorized but unissued bonds, with $603 million directly supported by its full faith and credit pledge. The unissued bonds include $294 million allocated for roads, $250 million for port facilities, and $290 million for general county services. Bonds issued for the port are secured by separate dedicated tax levy.


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