BRADENTON, Fla. — The rated debt of Alabama’s Birmingham-Jefferson Civic Center Authority has been upgraded to investment grade after Standard & Poor’s determined that revenues supporting the bonds are not affected by Jefferson County’s bankruptcy.
Standard &Poor’s raised the underlying rating on the authority’s 2002C bonds to AA from B, and the 2005A bonds to A-plus from B.
The outlook on both series was revised to stable from negative.
The Civic Center Authority, a distinct local government entity, operates the Birmingham Jefferson Convention Complex in downtown Birmingham, which is the Jefferson County seat.
The rating upgrades reflect Standard & Poor’s clarification of how Jefferson County’s bankruptcy filing in November affects pledged revenue to the Civic Center Authority’s bonds, according to analyst Brian Marshall.
“None of the BJCC’s debt was listed in the original bankruptcy filing, nor was the debt named in the county’s bankruptcy resolution,” Marshall said. “We understand that the county may in no way impair the pledged revenue.”
In previous reports about the Civic Center Authority’s bonds, S&P had said there were concerns about the potential disruption of revenues related to the county’s bankruptcy filing.
The 2002C bonds are secured by revenue from sales, tobacco and lodging taxes levied by the state for the authority.
The 2005A bonds are secured by revenue from special beverage and lodging taxes levied by the state for the authority, as well as payments in lieu of taxes that the authority imposes and collects on civic center sales.
The taxes are collected by the Jefferson County revenue director, who must remit the revenues to the BJCC “under penalty of six months’ hard labor in prison and a $500 fine,” Marshall said.
Coverage was 19 times maximum annual debt service on the 2002C bonds in fiscal 2011 and 3.05 times on the 2005A bonds, according to Standard & Poor’s.
The authority does not plan to issue debt in the near future.
Marshall said the stable outlooks on both series of bonds reflect the anticipation that pledged revenues will continue to generate coverage levels in excess of maximum annual debt service requirements.
S&P only rates a portion of the BJCC’s debt. The authority’s 1992 bonds do not have underlying ratings, nor do the 2011 special tax bond placed with Wells Fargo Bank NA.
The authority has about $64 million of principal and interest outstanding on all bonds through 2023, according to the fiscal 2011 audit.
Jefferson County filed the country’s largest municipal Chapter 9 bankruptcy case last November encumbered with $4.2 billion in debt. However, the Civic Center is not a component unit of the county.