Fitch Ratings has upgraded to BBB from BB Baldwin Park Public Financing Authority, Calif.'s $4.1 million 2003 sales tax and tax allocation bonds.
The rating outlook is revised to stable from negative.
The series 2003 bonds are limited obligations of the authority, payable from a first lien on sales tax and incremental property tax revenues derived from the Puente Merced project area and surplus tax increment revenues of the San Gabriel River, Delta and Sierra Vista project areas after repayment of debt secured by revenue from those project areas. The latter three project areas were merged with the Puente Merced project area in April 2000 by ordinance of the city of Baldwin Park (the city). The bonds are additionally secured by a cash-funded debt service reserve fund (DSRF) equal to maximum annual debt service (MADS).
Following significant revenue distribution shortfalls in fiscal 2012, the successor agency (SA) received revenues sufficient and timely for all debt service payments in fiscal 2013. Additionally, revenues received in 2013 enabled the SA to fully replenish prior year DSRF draws related to two other bond series.
Coverage of series 2003 annual debt service from pledged Puente Merced tax project area increment and sales taxes and surplus revenues from the merged project areas fell to 1.20x in fiscal 2012 from over 3.0x in 2010 and 2011. While indenture calculated coverage for fiscal 2012 was strong at nearly 3.0x from all pledged sources, actual revenues received by the SA were insufficient to cover all debt service due to dissolution-related timing changes and county payment delays, all of which have been remedied in 2013. The SA calculates coverage of series 2003 debt from all pledged revenues at over 3.5x for fiscal 2013. With stabilizing assessed value (AV) and improved revenue processes, Fitch expects coverage from all pledged sources to remain adequate at above 2.0x.