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Publication date: 18 Jun 2001 <br />Reprinted from RatingsDirect <br /> <br />Analysis <br /> <br />Essex (County of) <br /> <br />Analyst: Stephen Ogilvie, Toronto (1) 416 956~1870; Paul B Calder, CFA, Toronto (1) 416 956~1870; Valerie E Blair, Toronto (1) 416 956 4870 <br /> <br />Credit Rating <br />A+/Stable/ <br /> <br />Ratine Detail <br /> <br />Rationale <br />The ratings on the County of Essex (Essex) reflect superior long -run <br />population and taxable assessment growth in comparison with other Canadian <br />municipalities, a solid financial position, strong performances by the local <br />economy, and good financial results. <br /> <br />These strengths are offset somewhat by the likelihood that moderating auto <br />sector activity and more modest growth generally in the North American <br />economy in 2001 could slow local economic activity in the near term. <br /> <br />Recent five-year growth rate estimates for both population and taxable <br />assessment have averaged close to 3% per year. County taxpayers have <br />definitely benefited from taxable assessment growth, which has been a <br />significant factor in recent reductions in county tax rates. Rates are <br />decreasing again in 2001, the third consecutive annual decline. <br /> <br />Because of its Iow debt burden, and good reserve and reserve fund levels, the <br />county is almost a net creditor. About 90% of Essex's outstanding debt at the <br />end of 1999 was rate supported, representing the balance of debt that was <br />issued in 1997 to fund the construction of the Essex-Windsor Regional <br />Landfill. While Essex does not expect to issue new debt in 2001, the county <br />does have modest capital financing needs and will make a small draw on its <br />reserves. Essex's financial strength and flexibility should remain roughly <br />unchanged as lower reserve and reserve fund levels are largely offset by <br />declining debt and debt-service burdens. <br /> <br />The local economy performed well in 1999 and 2000, evidenced by rising <br />employment, building permit values, and a declining unemployment rate. <br />Employment growth in the Essex-Chatham-Kent-Lambton economic region <br />was strong during the period. As a result, the unemployment rate fell in 1999 <br />and 2000, narrowing the gap between the region's rate and the provincial <br />average. The confidence of consumers and businesses in the local economy <br />was evident in building permit values, which rose strongly in 1999 from a year <br />earlier. <br /> <br />Essex registered a good budgetary performance in 1999, generating an <br />operating surplus of 14.3% of operating revenues (or 17.5% of operating <br />revenues adjusted for provincial income support grants). <br /> <br />Outlook <br />The outlook reflects Standard & Poor's expectation that Essex's financial <br />position will remain relatively unchanged in the near term and improve after <br />2003 as the county's tax-supported debt is eliminated, rate-supported debt <br />declines further, and reserves and cash balances strengthen. Furthermore, <br />despite the slowdown in the local auto sector, taxable assessment should <br />continue to grow strongly in the long term. <br /> <br />Economy <br /> <br />Page 1 of 6 <br /> <br /> <br />