Fitch Ratings has affirmed the following --
The Rating Outlook is Stable.
The bonds are secured by tax increment revenues generated within the project area, net of administrative fees, pass-through amounts, and housing set-aside.
KEY RATING DRIVERS
SOUND COVERAGE: Fiscal 2014 maximum annual debt service (MADS) coverage on non-housing bonds is expected to be over 2 times (x) and holds up sufficiently under various Fitch stress tests. Housing revenues are not included in the coverage calculation for non- housing bonds, according to the original indenture.
RESILIENT ECONOMY; SOME TAXPAYER CONCENTRATION: Project area assessed value (AV) experienced relatively minor declines during the recession, and has shown modest recovery in 2014. The project area is somewhat concentrated in its top 10 property taxpayers.
SATISFACTORY AB1X26 IMPLEMENTATION: The rating incorporates the expectation that the agency will continue its satisfactory implementation of AB1x26 (dissolution legislation) procedures.
STABLE OUTLOOK: The rating is sensitive to shifts in fundamental credit characteristics including the successor agency's tax base performance and the continued orderly processing of payments post- dissolution. The Stable Outlook reflects Fitch's expectation that such shifts are unlikely.
The city's economy is led by tourism due to proximity to
The city's median household income levels are on par with state and national averages, at 92 percent and 108 percent respectively. Educational attainment rates are roughly comparable as well. The city's unemployment rate (5.9 percent in
RECOVERING TAX BASE
Project area AV grew in fiscal 2014 by 3.5 percent for the first time after four years of modest declines. The cumulative peak to trough decline was 8.3 percent from 2009 to 2013. Fitch expects AV growth to continue as the real estate market recovers. Approximately 35 percent of the land in the project area is for residential use, where house price increases will continue to be reflected in AV.
The major taxpayers within the project area have remained stable both in terms of composition and AV values. The project area is somewhat concentrated in the top 10 taxpayers which account for 17 percent of total project area AV, or 23 percent of incremental value (IV) in fiscal 2014. However, there is no significant concentration in industries or land use. Previously outstanding AV appeals among the top 10 seem to have largely been resolved. As of fiscal 2014, value at risk due to appeals is
Fiscal 2014 annual debt service (ADS) coverage is 2.4x by Fitch estimate, with MADS at 2.1x. MADS coverage remains sufficient under a few stress scenarios, including the loss of the top 10 taxpayers, continued AV declines of 5 percent a year for another four years, and the loss of all outstanding appeal values. Specifically, AV would have to decline by a high 37 percent in one year to reach 1x MADS as a result of the relatively mature nature of the project area. The IV to base year value is moderate at over 2.5x, indicating that volatility in AV does not have an exaggerated impact on IV.
AB 1x26 IMPLEMENTATION
The city of
In addition, a previous
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Fitch Ratings has affirmed the following