NEW YORK - Standard & Poor's Ratings Services said it raised its rating on Sonoma County Community Redevelopment Agency, Calif.'s tax increment bonds, issued for the Roseland project area, one notch to A-minus from BBB-plus based on Standard & Poor's view of the agency's stable underlying economy and strong coverage. The outlook is stable.
In addition, the rating reflects Standard & Poor's opinion of a stable property tax base with strong historical project area assessed value growth and level 2010 values and a project area with access to the Santa Rosa economy and residents with strong incomes.
"We believe assessed values should generate sufficient pledged tax increment revenues to continue to provide sound maximum annual debt service coverage," said Standard & Poor's credit analyst Lisa Schroeer. "We also believe the adequate additional bonds test should protect debt service coverage against significant additional bonding."
Tourism and agriculture, in particular grapes and wine production, are significant components of the Sonoma County economy. County income levels, on a household and per capita basis, are an above-average 124% and 117%, respectively, of national averages. Assessed value increased by an average of 9.7% annually since fiscal 2006 to $185 million in fiscal 2010. Assessed value declined, albeit just slightly, by 0.5% in fiscal 2010.
Standard & Poor's estimates pledged tax increment revenues cover maximum annual debt service by, what Standard & Poor's considers, a strong 3.9x based on 2010 assessed value numbers. With coverage at 1.25x maximum annual debt service, Standard & Poor's estimates the project area could withstand a decline of 15.5% in assessed value and still make 1x debt service coverage.
