SAN FRANCISCO--(BUSINESS WIRE)--Fitch Ratings has removed from Rating Watch Negative the following tax allocation bonds (TABs) for the Coronado Community Development Agency (CDA), CA:
--$150.6 million TABs, series 1996, 2000, 2003 and 2005, 'A+';
--$51.7 million refunding TABs, series 2006, 'A+';
--$16.8 million housing TABs, series 2003, 'A+'.
The Rating Outlook is Stable.
SECURITY
The non-housing portion of the TABs is secured by 80% of the tax increment received by the CDA, while the housing portion of the TABs is secured by housing set-aside revenues of 20%. The CDA receives 32.544% of total tax increment from the sole project area. Security also includes a debt service reserve fund equal to the least of maximum annual debt service (MADS), 1.25s average annual debt service, or 10% of bond proceeds; series 2003 is cash funded while series 1996, 2000, 2005, and 2006 each use a surety.
KEY RATING DRIVERS
PROGRESS ON AB 1X26 IMPLEMENTATION: The City of Coronado has been recognized as the successor agency (SA) to the CDA. The recognized obligation payment schedules (ROPS), which include calendar 2012 debt service, have been approved by the oversight board and state. The SA has received sufficient payments, along with available cash reserves, to cover the debt service included in the ROPS.
IMPLICATIONS OF AB 1484: The governor signed this trailer bill to the state's fiscal 2013 budget on June 27, 2012. The bill includes what Fitch believes are improvements to the ROPs approval process and other procedures going forward. However, it required repayment by many SAs of property tax distributions from December 2011 and January 2012 that the state believes should have been directed to other taxing entities. The SA reports that it made the required repayment and reports that sufficient funds remain for debt service payments.
HOUSING REVENUE AVAILABILITY: The lack of distinction between former housing set-aside revenue and total tax increment under AB 1X26 did not affect Fitch's assessment of credit quality as debt service coverage does not materially change assuming this commingling.
Additional information on the CDA is available in Fitch's June 14, 2011 release, available at 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
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 National Association of Realtors.
Applicable Criteria and Related Research:
--'Tax-Supported Rating Criteria' (Aug. 15, 2011);
--'U.S. Local Government Tax-Supported Rating Criteria' (Aug. 15, 2011).
Applicable Criteria and Related Research:
Tax-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=648898
U.S. Local Government Tax-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=648842
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