Two rating agencies have upgraded bonds issued for the Rio Nuevo Multipurpose Facilities District in Tucson.
Standard & Poor’s upgraded the debt to AA-plus from A-plus. The three-notch upgrade covers $5.8 million of taxable Series 2005 junior-lien, excise-tax revenue bonds issued by the Tucson-Pima County Industrial Development Authority for the district’s Fox Theatre project.
Given fiscal 2007 revenues of $16.2 million, coverage of senior 2005 obligations was 20 times, declining to 17.3 times debt service.
At the same time, Fitch Ratings upgraded the bonds to A-plus from BBB-minus.
The authority pledges excise tax revenues the district receives from Arizona under a tax increment financing measure. The pledge of excise tax revenue that secures the Series 2005 bonds is senior to all other current and future obligations of the district. A new master indenture has been created under which all future district debt will be issued, and no additional bonds will be issued under the prior master indenture.
The district was formed in 1999 by the cities of Tucson and South Tucson for the purpose of redeveloping downtown Tucson. The master plan includes cultural, residential, commercial, office, and mixed-use developments.
In December 2008, the district issued $80 million of subordinate-lien excise tax revenue bonds, which have a claim on the pledged revenues that is subordinate to the Series 2005 bonds. The 2008 bond proceeds will go toward parking facilities, a science center, a history museum, a children’s museum, civic center projects, and partial repayment to the city for some of the projects.