LOS ANGELES — Successor agencies to California's redevelopment agencies have experienced more upgrades than downgrades, Standard & Poor's said in a recent report.
The successor agencies were formed after the state dissolved all local redevelopment agencies in 2012. The credit quality for these successor agencies has continued to improve, S&P said in Monday's report.
Legislation to dissolve the agencies - and return the tax increment money that formerly went to RDAs to government entities including the counties, cities, school districts and a variety of other districts that receive a share of property tax money - passed in early 2011 and was affirmed by the state's Supreme Court in late 2011.
Though the state's Department of Finance repeatedly contended that making payments on the dissolved agencies' outstanding bonds was the first priority during the dissolution process, uncertainty in the process created investor concern and resulted in all three major rating agencies downgrading much RDA debt to junk.
After a period of uncertainty post-dissolution, S&P has noted in its' report that the successor agencies have managed to pay off almost all RDA debt on time with pledged revenue and most are setting aside money for debt service.
Improvements in cash and debt management combined with rising assessed property values have boosted the agencies credit quality, S&P analysts wrote.
"We expect credit quality to strengthen further as SA's debt service coverage increases and management practices improve," S&P analysts wrote.
