The current offering is the third installment of a 50

The bonds are direct obligations of the district, payable from and secured by anunlimited ad valorem tax levied against all taxable property within thedistrict. Proceeds will be used to construct and renovate an intermediate schoolbuilding and pay costs of issuance. The 'A' rating is based on the district's stable financial results, modest debtposition, rapid principal amortization, and expanding tax base. The district'sfinancial performance has been typical of Arizona school districts,characterized by small operating margins. The state's expanded role in financingminimum school facility needs is an additional stabilizing factor and has helpedstrengthen the district's debt position. Fitch believes the ongoing residentialconstruction slowdown in the Phoenix area is a concern, as the district expects15-20 declines in district home values in fiscal 2009.

In addition, thedistrict is currently at its statutory debt limit, which restricts GO bondissuance after 1998 in excess of 5 of its secondary assessed valuation, or$1,500 per student. The current offering is the third installment of a $50.7 million authorization,approved by 60 of the voters in November 2006 as a supplement to the SchoolFacilities Board (SFB)-funded projects to construct new schools and improveexisting facilities. The district does not anticipate any significant secondaryassessed valuations (SAV) tax rate impact from the current authorization, giventhe average annual rate of tax base growth. A $15 million capitaloverride proposal put to voters failed last year, and the district will not seeka capital override from voters again until November 2009. In November 2008,voters approved a K-3 override which allows the district to exceed its statutorylimit to fund programs that affect kindergarten through third grades by amountsnot to exceed five percent of the prescribed budget limit.

District officialsreport remaining on track with their five-year capital improvement plan despitethese override failures. Located in the west valley of Maricopa County, the district comprises a portionof Phoenix and the cities of Glendale and Avondale and encompasses approximately20 square miles. The district is predominately residential, and commercial andretail development is accelerating in the district, aided by the opening of theNational Football League Arizona Cardinals' football stadium and recentpopulation growth. Additional retail and commercial projects are in variousstages of planning and construction. The district also benefits from the area's diverse economy as primarily abedroom community for the greater Phoenix metropolitan area.

Maricopa County isthe center of economic activity in Arizona, containing over 64 of the state'slabor force in 2007, and wealth levels for the area typically exceed statelevels. Student enrollment has moderated from previous rates of rapid growth,with the annual rate of growth averaging 2.7 over the past five fiscal years,well below the nearly 8 average annual gains from fiscal 2000-2004. For fiscal 2008/2009, district enrollment isexpected to decline 5.5. Strong growth of roughly 20 annually over the pastfive years in SAV continues to outpace student enrollment gains. Debt levels are modest and the district's debt burden is expected to remain low,given the substantial capital financing provided by the state's SFB under theStudents First statute.