LOS ANGELES — Moody's Investors Service upgraded four notches to investment grade $5.8 million in tax allocation refunding bonds managed by the successor agency to Torrance, Calif.'s redevelopment agency.
The 1998 Series A TABs issued for the city's downtown redevelopment project were bumped to Baa1 from Ba2, according to the Moody's report released Aug. 14.
The bonds are secured by a pledge of tax increment revenues from the successor agency's downtown project area.
Moody's announced on June 24 with the release of its tax increment debt methodology that it had placed the ratings for nearly all California tax allocation bonds on review for upgrade The four-notch upgrade completes Moody's review for the Torrance successor agency.
"Three years into the post-dissolution process, the administrative risks related to the payment of debt service have significantly lessened, so we are now placing greater weight on the fundamental project area characteristics and some of the positive features of the dissolution legislation," Moody's analysts said in the report. "These positive features include the closed lien status of the bonds and the potential availability of surplus housing revenues for non-housing TABs debt service."
The upgrade to Baa1 takes into account the downtown project area's strong ratio of incremental assessed value to total AV, healthy debt service coverage level, above average wealth levels, growing tax base and the reduced risks posed by the cumulative tax revenue limits. The rating also reflects moderate taxpayer concentration and the small AV and geographical size of the project area.
In 2012, state legislation dissolved all California redevelopment agencies, replacing them with successor agencies to serve as fiduciary agents.