Bexar County, TX. Exhibit 1 Assessed Valuation Gains Reflect Continued Economic Activity CLIENT SERVICES. Source: Bexar County, TX,

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1 CREDIT OPINION Bexar County, TX New Issue - Moody's Assigns Aaa to Bexar County's, TX two GOLT sales; Outlook is Stable New Issue Summary Rating Rationale Moody's Investors Service has assigned a Aaa rating to Bexar County's, TX $384.7 million Limited Tax Refunding Bonds, Series 2017, and $28.4 million Flood Control Tax Refunding Bonds, Series Moody's maintains the Aaa rating on $1.7 billion in previously issued unlimited and limited tax obligations. The outlook is stable. Contacts Adebola Kushimo VP-Senior Analyst adebola.kushimo@moodys.com Alexandra S. Parker MD-Public Finance alexandra.parker@moodys.com Denise Rappmund VP-Senior Analyst denise.rappmund@moodys.com The Aaa rating reflects the county's expansive tax base that is anchored by institutional presence and benefits from a thriving and diverse local economy despite low income indicators. It also incorporates the county's practice of conservative budgeting reflected by a history of financial performance materially outperforming the budget, and debt burdens that are above the median for similarly rated credits. There is no distinction between the limited and unlimited tax ratings due to the significant amount of headroom under the limited tax rate. Exhibit 1 Assessed Valuation Gains Reflect Continued Economic Activity CLIENT SERVICES Asia Pacific $120, $100,000 Japan EMEA Full Value (in millions) Americas $140,000 $80,000 $60,000 $40,000 $20,000 $ Source: Bexar County, TX, Credit Strengths» Sizeable and diverse regional economy continues to enjoy commercial and residential investments» History of financial performance positively surpassing budget expectations» Tax rates that remain well under the statutory cap Credit Challenges» Below median income indicators 2016

2 » Large and growing population driving demand for service» Elevated debt burden Rating Outlook The stable outlook reflects the county's regional economic strength and strong revenue performance that should continue to benefit from robust commercial and residential developments. Factors that Could Lead to an Upgrade» Not applicable Factors that Could Lead to a Downgrade» Structural imbalance eroding reserves» Significant decline in taxable values» Material increase in the county's debt burden beyond current projections Key Indicators Exhibit 2 Bexar (County of) TX Economy/Tax Base Total Full Value ($000) $ 97,400,452 $ 98,919,273 $ 104,364,039 $ 118,155,492 $ 127,819,595 Full Value Per Capita $ Median Family Income (% of US Median) 56,631 $ 56,421 $ 58,334 $ 64,725 $ 67, % 90.1% 90.3% 89.9% 89.9% Finances Operating Revenue ($000) $ 428,198 $ 417,147 $ 434,141 $ 445,319 $ 501,928 Fund Balance as a % of Revenues 30.9% 32.1% 29.1% 23.5% 23.7% Cash Balance as a % of Revenues 34.4% 36.1% 32.7% 27.2% 26.4% 1,013,330 $ 1,463,640 $ 1,432,475 $ 1,527,285 $ Debt/Pensions Net Direct Debt ($000) $ 1,586,720 Net Direct Debt / Operating Revenues (x) 2.4x 3.5x 3.3x 3.4x 3.2x Net Direct Debt / Full Value (%) 1.0% 1.5% 1.4% 1.3% 1.2% Moody's - adjusted Net Pension Liability (3-yr average) to Revenues (x) 0.9x 1.1x 1.3x 1.5x 1.5x Moody's - adjusted Net Pension Liability (3-yr average) to Full Value (%) 0.4% 0.5% 0.5% 0.6% 0.6% Source: Bexar County, TX Comprehensive Annual Financial Reports FY , Moody's Investors Service Recent Developments Fiscal year 2017 unaudited results reflect a $6.6 million increase in the general fund, a positive variance from the draw of $10 million recorded in the adopted budget. There is no new information since our last report in October. Detailed Rating Considerations Economy and Tax Base: Local economy benefits from robust activity Bexar County's economy will benefit from strong and sustained commercial and residential demand that supports development initiatives, key in driving assessed valuation growth. Bexar County is the third largest county in the state and is home to San Antonio (Aaa stable), the seventh largest city in the nation. This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on for the most updated credit rating action information and rating history. 2

3 The metropolitan area's economy is anchored by defense, financial services, and tourism, and also benefits from several others including biomedical sciences. Increasing employment opportunities has lead to expansive labor force participation yielding low unemployment levels (2.9%) within the county that remain, well below the state (3.5%) and the nation (3.9%); data as of October In spite of the positive momentum, income levels within the county are low, depressed in part by the institutional presence of several military installations and other educational institutions. The economic vitality has contributed to an expansive tax base that has grown an annual average of 8.8% over the past five years through fiscal Certified values for fiscal 2018 reflect a 7.8% increase to $150.9 billion, which is significantly larger than it's peer group median. County officials anticipate an annual 3% increase in assessed values going forward. However developments are likely to push materially higher increases, at least over the next 12 to 18 months. The city is pursuing plans to expand air service, grow professional sporting events, restore the Alamo Plaza, and maintain the five Missions including the Alamo, which have been designated World Heritage Sites and are expected to drive additional tourism. Convention and meeting space remains in high demand with bookings through In partnership with the city, San Antonio Combined Utility Enterprise (Aa1 stable sr., Aa2 stable jr.), San Antonio Water and Sewer System (SAWS) (Aa1/stable sr., Aa2/stable jr.), the city's Economic Development Foundation remains successful in its mission to assist businesses and industries in locating and expanding in the San Antonio area, driving job growth. Residential construction remains high, driven by strong population growth that reached an estimated 1.8 million in Financial Operations and Reserves: Operating performance benefits from conservative budget management The county's financial position should remain stable supported by a history of conservative budgeting that allows the county to positively outperform its budget. The county's budgeting practice includes appropriation of reserves on an annual basis. However, conservative revenue estimates and expenditure control has contributed to annual operating success. With the exception of fiscal 2015, when the county recorded a $3 million deficit, the general fund has reported strong performance within the past six years. The fiscal 2015 draw was recorded following a $10 million transfer, with a majority of the transfer for the self insurance fund. In fiscal 2016, which ended on September 30, 2016, general fund performance reported a $6.2 million surplus, increasing the total fund balance to $84.2 million (a healthy 21% of general fund revenues). Of the total, $79 million (19.7%) was available. Including the debt service fund, the total operating fund balance was $124.1 million (24.7% of operating revenues), with $118.9 million (23.7%) available. Property tax receipts provide the largest revenue source at over 70%, and the revenue performance has been stable over the past decade. The county maintains ample capacity under the total tax rate providing significant revenue raising flexibility. The county's statutory maximum tax rate is $8 per $1,000 of assessed values, with no more than $4 allocated for debt service. In fiscal 2017, the county levied a total tax rate of $2.93 with $2.36 for operations and $0.57 for debt service. Also in the same fiscal year, the county levied $0.16 for flood control debt, well under the $1.30 limit. The total tax rate was slightly lower in fiscal Public safety costs at over 37% of operations is the county's largest expenditure, and the allocation has been increasing over the past few years driven by population gains. However, the county is working on certain initiatives to manage the cost over the long term. The county also has a steady increase of transfers out to support the health insurance fund. However, plan changes as well as significant premium increases (17%) for all employees that were effective January 2017, are expected to significantly stabilize the health insurance fund. Unaudited results for fiscal 2017 reflect a $6.6 million increase in the general fund, further improving financial strength. The adopted fiscal 2018 budget reflected a $16 million use of reserves. However, county officials report $26 million in contingencies included in the budget, and expect actual performance will be much more favorable, consistent with the county's operating history. LIQUIDITY The general fund net cash position at the close of fiscal 2016 was $90.8 million, a favorable 22.6% of general fund revenues. Including the debt service fund, the net cash position was $132.4 million, 26.4% of operating fund revenues. Liquidity is expected to remain stable based on fiscal 2017 unaudited results. Debt and Pensions: Elevated debt expected to remain The county's debt profile will remain elevated relative to rated peers over the near term given slow principal amortization and planned additional issuance. Including the current sale, the county's direct debt burden of 1.1% (7.1% overall) on a fiscal year 2018 valuation is 3

4 approximately double the national median for the rating category. Following this sale, the county will have $61.3 million in authorized but unissued limited tax obligations. However, the county plans to issue between $145 million and $195 million within the next 12 months utilizing general obligation bonds and certificates of obligation. Beyond the near term, the county's capital plan calls for $50 million in annual issuance. DEBT STRUCTURE The debt service schedule on the limited tax bonds ascends to over $96 million by fiscal 2028 and stays relatively flat through fiscal 2031, before descending until final maturity in fiscal On the unlimited obligations, the debt service schedule is descending through final maturity in fiscal The flood control tax debt ascends from $16.7 million in fiscal 2018 to $25.8 million (fiscal 2037), before descending to final maturity scheduled for fiscal Payout is slow with 25.7% of principal retired in 10 years. DEBT-RELATED DERIVATIVES All of the county's debt is fixed rate, and the county is not party to any debt related derivatives. PENSIONS AND OPEB Budgetary pressure due to the county's participation in Texas County District Retirement System (TCDRS) is expected to remain minimal. The county has consistently made 100% of its annual required contribution (ARC). In fiscal year 2016, as reported, the county's unfunded actuarial accrued liability (UAAL) was $160.2 million. Moody's adjusted net pension liability (ANPL) for the county, under our methodology for adjusting reported pension data, was $847.9 million in fiscal year The three year average ANPL is a manageable 1.5x operating revenues, including the general and debt service funds. Moody's ANPL reflects certain adjustments we make to improve comparability of reported pension liabilities. The adjustments are not intended to replace the county's reported contribution information, or the reported liability information of the statewide cost-sharing plans, but to improve comparability with other rated entities. The county's fiscal 2016 contribution rate was above the Moody's calculated tread water level of $21.2 million. The tread water indicator measures the annual government contribution required to prevent the reported net pension liability from growing, under reported assumptions. Contributions above this level cover all net pension liability interest plus pay down some principal; this is stronger from a credit perspective compared to contributions below this level. Ratios comparing government contributions to the tread water level and tread water costs to government revenues shed light on budgetary fixed cost burdens. The county offers other post employment benefits (OPEB) in form of health insurance. The plan is funded on a pay as you go basis. In fiscal 2016, the county paid 41.8% of the required contribution. At the end of the fiscal year, the county reported an unfunded liability of $183 million. In fiscal year 2016, fixed costs including pension contribution, debt and other post employment benefits (OPEB), accounted for 28.9% of total expenditures. Management and Governance: High Institutional Framework, Experienced and Stable Management Team Texas Counties have an Institutional Framework score of Aaa, which is high compared to the nation. Institutional Framework scores measure a sector's legal ability to increase revenues and decrease expenditures. The sector's major revenue sources are subject to a cap, which cannot be overriden. However, the cap of $8 per $1,000 of assessed values, with no more than $4 allocated for debt service, still allows for significant revenue-raising ability. Unpredictable revenue fluctuations tend to be minor, or under 5% annually. Across the sector, fixed and mandated costs are generally less than 25% of expenditures. Texas is a Right to Work state, providing significant expenditure-cutting ability. Unpredictable expenditure fluctuations tend to be minor, under 5% annually. The county's management team is tenured with expansive experience. The county demonstrates good governance with the use of multi year financial forecasting and capital planning. The county's financial history also demonstrates its conservative budgeting practices as the county typically outperforms the budget, positively. 4

5 Legal Security All the bonds are secured by a direct and continuing ad valorem tax, levied against all taxable property in the county within the limits prescribed by law. The limited tax bonds are subject to a maximum of the $4 per $1,000 of assessed values from the $8 per $1,000 of assessed values allocated to counties; in fiscal 2017 the county levied $0.55 for limited tax debt service. The flood control tax bonds are subject to a maximum tax rate of $1.50 per $1,000 of assessed values; in fiscal 2017 the county levied $0.13 for flood control. Use of Proceeds Proceeds from the sale will be used to refund certain maturities of existing debt, for savings, and no extension of final maturity. Obligor Profile The County is located in south central Texas and is a component of the Metropolitan Statistical Area ( MSA ) of San Antonio, which is also the county seat. The San Antonio MSA is the second largest city in Texas, and the seventh largest city in the United States. The 2015 estimated county population is 1.8 million. Methodology The principal methodology used in this rating was US Local Government General Obligation Debt published in December Please see the Rating Methodologies page on for a copy of this methodology. Ratings Exhibit 3 Bexar (County of) TX Issue Flood Control Tax Refunding Bonds, Series 2017 Rating Type Sale Amount Expected Sale Date Rating Description Limited Tax Refunding Bonds, Series 2017 Rating Type Sale Amount Expected Sale Date Rating Description Rating Aaa Underlying LT $28,385,000 12/12/2017 General Obligation Limited Tax Aaa Underlying LT $384,745,000 12/12/2017 General Obligation Limited Tax Source: Moody's Investors Service 5

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7 7 Contacts CLIENT SERVICES Adebola Kushimo VP-Senior Analyst Americas Asia Pacific Japan EMEA