Fitch Ratings last week upgraded to AAA from AA-plus its rating on $60 million of ad valorem bonds issued by the Indianapolis Local Public Improvement Bond Bank, which functions as the borrowing arm of the triple-A rated Indianapolis.
The outlook is stable. The upgrade reflects the City-County Council’s requirement to levy an ad valorem tax if needed to pay debt service, Fitch said.
Proceeds from the bonds, issued in 2008, were used to purchase obligations from the Indianapolis Redevelopment District, which originally issued the bonds to finance public improvements for the development of a JW Marriott headquarters hotel for the Indiana Convention Center.
The hotel and convention center are part of the city’s large downtown tax-increment financing district. The commission that operates the district expects to make debt-service payments from surplus TIF revenues that were not pledged as part of the bond issue.
“Fitch believes the city-county would levy the ad valorem tax to support the Series 2008A bonds in a timely fashion should TIF revenues fall short of debt service requirements,” analysts said in the upgrade report.
The bonds are limited obligations of the bond bank, and the underlying, original obligations are supported by an ad valorem property tax on all taxable property in the redevelopment district.