Fitch Ratings said it upgraded to AA-minus from A-plus Syracuse Industrial Development Authority (IDA), N.Y.'s $41.4 million school facility revenue bonds (Syracuse city school district project), series 2008A.

In addition, Fitch affirms its AA-minus rating on the following bonds: $30.7 million school facility revenue bonds (tax exempt) (Syracuse city school district project), series 2011A; $15 million school facility revenue bonds (federally taxable qualified school construction bonds) (Syracuse city school district project), series 2011B; $29.9 million school facility revenue bonds (Syracuse city school district project), series 2010.

The rating outlook is positive.

The bonds are secured solely by state aid revenues annually appropriated to the Syracuse City School District by the state of New York and remitted to the district from the period Dec. 1 through March 31. The funds are subject to appropriation as installment purchase payments by the district. The district's budget is subject to approval by the city of Syracuse. Installment purchase payments are not subject to offset, counterclaim, or reduction.

In the event that the district fails to appropriate state aid sufficient to cover debt service payments by Nov. 10, state aid sufficient to cover the subsequent principal and interest payments will be intercepted and forwarded to the trustee. The intercept period is from Nov. 15 to May 1, when principal and interest are due. The 2008 bonds are additionally secured by a surety-funded debt service reserve funded to the IRS standard; there is no debt service reserve securing the 2010 or 2011 bonds.

The rating on the bonds, one notch below Fitch's AA general obligation (GO) bond rating state of New York, reflects the security provided by the state aid intercept for the bonds. Bondholders benefit from remittance of state aid to a depository fund from which debt service is set aside before flowing to the district and, in the event of a failure to appropriate, a state aid intercept structure that provides for pre-default payment.

The upgrade reflects the longer period of time in which state aid is available for intercept, which materially improves coverage.

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