Fitch Ratings assigns its ''F1+'' rating to Long Beach, California''s (the city) 2009-2010 $54 million tax and revenue anticipation notes (TRANs). The notes are scheduled to be sold via negotiation on Sept. 16, 2009. In addition, Fitch affirms its ''A+'' underlying rating on the following series of lease revenue bonds:

--Long Beach Bond Finance Authority, series 1997A (City of Long Beach-Los Angeles County Civic Center Authority);

--Long Beach Bond Finance Authority, series 1998B (Temple and Willow Facility);

--Long Beach Bond Finance Authority, series 1999A (Rainbow Harbor);

--Southeast Resource Recovery Facility Authority, series 2003A and B.

The Rating Outlook for all long-term debt is Stable.

The ''F1+'' rating reflects the general credit characteristics of the city and strong coverage of note repayment by projected cash flow and borrowable funds. While the general fund unreserved balance is historically healthy and improved significantly in fiscal 2008 (to $46 million or 12% of spending), it is pressured in fiscal years 2009 and 2010 as some economically sensitive tax revenues decline. In response to revenue deterioration, management has demonstrated its willingness to make significant reductions in both personnel and non-personnel operating expenditures. While the city''s socio-economic characteristics are somewhat below-average and the unemployment rate has increased sharply, the local economy has diversified, taxpayer concentration is very low, and the city is actively promoting economic and workforce development.

The 2009-2010 TRANs are larger than the $49 million 2008-2009 TRANs, due in part to the inclusion for the first time of a $25 million prepayment of the general fund portion of the city''s fiscal 2010 CalPERS obligation. This is partially offset by lower cashflow needs from the city''s redevelopment agency.

The unrestricted general fund revenues pledged to pay the TRANs are projected to total $425 million for fiscal 2010, covering note principal and interest a strong 7.8 times (x). Funds for repayment will be set aside in May (33%), June (33%), and July (34%), 2009. The projected cash flow covers each set-aside well, ranging from 1.6x-4.4x. In addition, the city estimates it will have $130.3 million in immediately borrowable resources in fiscal 2010 available for note repayment, if necessary. This includes the city''s new $9 million budget stabilization fund.

In fiscal 2009, the city experienced significant revenue declines from its sales taxes, oil proceeds, interest earnings, and fines and forfeitures income. In response, the city implemented significant expenditure reductions including mandatory five-day furloughs. As a result of these expenditure reductions, the city expects to add to its reserve levels in fiscal 2009.

In fiscal 2010, the city projects ongoing revenue pressure which it plans to address through employee furloughs, position reductions, and/or compensatory labor concessions and revenue increases. The city is currently projecting increases in its sales tax and transient occupancy tax revenues due to new and expanded businesses and hotels within the city which should help drive the anticipated fiscal 2010 surplus.

Long Beach''s economy continues to grow and diversify from its historical dependence on aerospace and related activity. Significant retail, office, entertainment, and residential developments have made major contributions to the city''s assessed valuation and revenue base. Although Boeing remains a major economic component and the city''s largest taxpayer and second largest employer, its assessed valuation and number of employees have both declined markedly. The local housing market is under pressure with a significant drop-off in new housing starts and 3% taxable assessed valuation decline in fiscal 2010. The city''s income levels remain below county, state, and national averages, and the unemployment rate increased to 12.5% in June 2009.

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Fitch Ratings, San Francisco
Alan Gibson, 415-732-1752
Amy Doppelt, 415-732-5612
or
Media Relations:
Cindy Stoller, 212-908-0526, New York
Email: cindy.stoller@fitchratings.com