NEW YORK - Standard & Poor's Ratings Services said it raised its underlying rating (SPUR) on Culver City Redevelopment Agency, Calif.'s tax allocation bonds to A from A-minus.
The ratings reflect Standard & Poor's assessment of the large, mature, multiuse project area located within an affluent part of West Los Angeles, with easy access to the greater Los Angeles economy; good recent growth in assessed valuation (AV); and strong coverage of maximum annual debt service (MADS) on senior and parity debt, at 1.9x based on fiscal 2010 AV.
Securing the bonds is a pledge of tax increment revenues from the agency's merged project area (MPA), less housing set-asides and pass-throughs and after debt service payments on the agency's outstanding senior 1993 bonds.
These strengths are partly tempered by Standard & Poor's view of taxpayer concentration, which we consider moderate. The top 10 taxpayers account for 24.1% of total AV and 27.8% of incremental AV, with the single top taxpayer Sony Corp. accounting for 6.0% of total AV and 6.7% of incremental AV. Also mitigating the credit strengths is an additional bonds test (ABT) that requires 1.25x coverage of MADS, but also includes revenues.
"The stable outlook reflects our expectation that valuations in the underlying tax base will remain strong, buoyed by the project area's strategic location within and access to the greater Los Angeles Basin," said Standard & Poor's credit analyst Bea Chiem. "We also believe the MPA's good debt service coverage and an ABT that protects against the loss of the top taxpayer adds stability to the rating," said Chiem.
The MPA is roughly eight miles west of downtown Los Angeles and consists of four component areas that encompass a sizable 1,286 acres of essentially built-out land within Culver City in West Los Angeles.
