Fitch Ratings has affirmed the following ratings for Douglas County, Colorado (the county):

--$10.55 million outstanding open space sales and use tax revenue bonds, series 2009 at 'AA';

--Implied general obligation (GO) bonds at 'AA+'.

The Rating Outlook is Stable.

SECURITY

The open space bonds are payable from 80% of the county's share of the countywide 0.17% sales tax that is dedicated to open space uses. The sales tax was approved by voters through 2023, one year after the final maturity of all bonds payable from this revenue. The bonds are not secured by a debt service reserve fund.

KEY RATING DRIVERS

STRONG SALES TAX PERFORMANCE: Debt service coverage for open space bonds remains strong, and has improved with recent growth in sales tax receipts.

STABLE FINANCIAL POSITION: The implied GO rating is predicated on the county's history of large financial reserves, conservative budgeting, and effective cost controls.

STRONG ECONOMIC FOUNDATION: The county has a mature and diversified local economy, low unemployment rates, and wealth levels that are well above state and national averages.

AFFORDABLE DEBT BURDEN: The county's debt profile is characterized by low debt levels, very rapid principal amortization, and limited debt plans. The county has no unfunded pension liabilities, and overall carrying costs are modest.

RATING SENSITIVITIES

SHIFT IN FUNDAMENTALS: The ratings are sensitive to material changes in fundamental credit characteristics, including the county's sound financial management practices. The county's history of strong financial performance indicates expected rating stability. The open space revenue bond rating is also sensitive to significant changes in pledged revenue performance and debt service coverage.

CREDIT PROFILE

Douglas County covers 844 square miles in the I-25 corridor between Denver and Colorado Springs, two of the main economic centers in Colorado. The county includes unincorporated Highlands Ranch, the cities of Lone Tree and Castle Pines, and the towns of Castle Rock (county seat), Parker, and Larkspur. The county has a population of about 306,000, and grew by approximately 66% in the last decade. Population growth has been rapid in each of the last three decades, making it the fastest growing county in Colorado and the 16th fastest growing county in the U.S.

STRONG DEBT SERVICE COVERAGE

Actual pledged revenue collections improved in each of the last five years due to strengthening of local sales activity. Year-to-date collections through August 2014 are 5% above the levels collected in 2013, during which sales tax revenue grew by 8% over the prior year. Debt service coverage on the senior open space bonds is projected to strengthen to about 4.5 times (x) in fiscal 2014, up from 3.5x in fiscal 2012. The senior open space lien is closed.

FITCH STRESS TESTS

Using projected fiscal 2014 pledged revenue of $8.8 million, coverage for both average annual debt service (AADS) and maximum annual debt service (MADS) of the senior lien bonds remains above 2.6x under a stress test scenario assuming 40% revenue contraction. The largest historical pledged revenue decline was 21.2% in fiscal 2009.

In the event of default on any subordinate lien bonds (not rated by Fitch), there is no default or acceleration of senior debt or other adverse effects to senior bondholders.

SOUND FINANCIAL PERFORMANCE

Extensive financial planning and conservative budgeting practices have contributed to the county's solid financial operations. The county regularly reports very high reserves. Recent fund balance drawdowns have been for one-time capital projects. The county's largest revenue source is property taxes, accounting for 69% of total general fund revenues in fiscal 2013.

Fiscal 2013 audited results show that the county maintained $53 million of unrestricted general fund balance, a high 50% of operating expenditures and transfers out. For fiscal 2014, projected results indicate a modest surplus due to delayed capital projects, beating budgeted projections of a $5 million drawdown.

The fiscal 2015 budget assumes $11 million use of general fund balance for one-time spending requests and capital projects, including the projects delayed in fiscal 2014. Given past practices and results, Fitch believes management will continue its proactive financial planning practices and budgetary oversight in order to maintain the county's sound financial position.

MINIMAL DEBT BURDEN

Overall debt ratios are modest at $1,873 per capita and 1.3% of market value. Principal payout of county long-term debt is very rapid with 100% retired in 10 years. The county's capital plan calls for modest pay-as-you-go financing from excess open space and property taxes, and no borrowings are currently contemplated.

County employees participate in a defined contribution retirement plan. The county does not offer post-employment healthcare benefits. Carrying costs related to long-term debt and pension liabilities are very modest at 5.1% of governmental fund spending.

INCLUSION WITHIN THE DENVER METRO ECONOMY

Increased residential and commercial construction following the recession produced 3% growth in the county's assessed valuation (AV) for fiscal 2013. New construction offset reassessment losses in fiscal 2014 for flat net values in the state's multi-year appraisal/review process, followed by 2% AV growth for fiscal 2015. Management projects that continuing development and economic recovery will result in strong tax base growth for fiscal 2016, consistent with Fitch's expectations for other Denver-area entities.

The county has a mature and diversified local economic base anchored by telecommunications, healthcare, retail, and business and professional services. The unemployment rate has trended downward in recent years to 3.4% in September 2014, well below the Colorado (4%) and U.S. (5.7%) rates.

Wealth levels are notably high for the state and nation. Per capita money income is 140% of the Colorado average and 156% of the U.S. average, and median household income is roughly 173% of the state average and 192% of the U.S. average.

Additional information is available at 'www.fitchratings.com'.

In addition to the sources of information identified in Fitch's Tax-Supported Rating Criteria, this action was additionally informed by information from Creditscope, University Financial Associates, S&P/Case-Shiller Home Price Index, IHS Global Insight, and the National Association of Realtors.

Applicable Criteria and Related Research:

--'Tax-Supported Rating Criteria' (Aug. 14, 2012);

--'U.S. Local Government Tax-Supported Rating Criteria' (Aug. 14, 2012).

Applicable Criteria and Related Research:

Tax-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686015

U.S. Local Government Tax-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685314

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=964795

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